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Bankruptcy Law

2010

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Full-Text Articles in Law

The New Financial Deal: Understanding The Dodd-Frank Act And Its (Unintended) Consequences, David A. Skeel Jr. Oct 2010

The New Financial Deal: Understanding The Dodd-Frank Act And Its (Unintended) Consequences, David A. Skeel Jr.

Faculty Scholarship at Penn Law

Contrary to rumors that the Dodd-Frank Act is an incoherent mess, its 2,319 pages have two very clear objectives: limiting the risk of the shadow banking system by more carefully regulating derivatives and large financial institutions; and limiting the damage caused by a financial institution’s failure. The new legislation also has a theme: government partnership with the largest Wall Street banks. The vision emerged almost by accident from the Bear Stearns and AIG bailouts of 2008 and the commandeering of the bankruptcy process to rescue Chrysler and GM in 2009. Its implications for derivatives regulation could prove beneficial ...


Iflas And Chapter 11: Classical Islamic Law And Modern Bankruptcy, Abed Awad, Robert E. Michael Oct 2010

Iflas And Chapter 11: Classical Islamic Law And Modern Bankruptcy, Abed Awad, Robert E. Michael

Elisabeth Haub School of Law Faculty Publications

There is no question that the orderly development of Islamic finance will require finding ways to amalgamate the classical Islamic law of bankruptcy with the needs of the modern Islamic finance industry. The unreasonable reliance on ever-expanding opportunities has disappeared along with the global credit markets. It is therefore inescapable that loss scenarios must be dealt with. That in turn means effective bankruptcy laws. We hope this article will help foster the effort.


The Rise In Elder Bankruptcy Filings And Failure Of U.S. Bankruptcy Law, John A. E. Pottow Aug 2010

The Rise In Elder Bankruptcy Filings And Failure Of U.S. Bankruptcy Law, John A. E. Pottow

Law & Economics Working Papers

Recent empirical legal scholarship on the consumer bankruptcy system has uncovered a marked rise in the proportion of elder Americans filing for relief under the Bankruptcy Code. But these studies have not probed the reasons behind that rise, an omission this Article seeks to address. Professor John Pottow and colleagues recently assembled the new dataset of the Consumer Bankruptcy Project (CBP), the largest national sample of consumer debtors in this country, which he uses to explore the sources of elder bankruptcy. The findings are both striking and ominous. While multiple factors, such as health problems and medical debts, contribute to ...


Iowa's Homestead Exemption: Three Decades Of Bankruptcy Court Application And Development, Patrick B. Bauer Jul 2010

Iowa's Homestead Exemption: Three Decades Of Bankruptcy Court Application And Development, Patrick B. Bauer

College of Law Publications

No abstract provided.


Death Of A (Used Car) Salesman: An Examination Of The Incredible Auto Sales, Llc Bankruptcy, Alicia Teubert, Melissa Carraso Apr 2010

Death Of A (Used Car) Salesman: An Examination Of The Incredible Auto Sales, Llc Bankruptcy, Alicia Teubert, Melissa Carraso

Chapter 11 Bankruptcy Case Studies

At first glance, the Incredible Auto Sales, LLC (“Incredible Auto”) Chapter 11 bankruptcy appeared fairly standard. A once prospering business found itself in the red trying to keep its inventory stocked, pay its bills, and remain a going concern. On paper, the prospects of reorganization seemed promising. It had nearly $2 million worth of inventory. It had nearly $200,000 worth of machinery, fixtures, parts, and supplies. Plus, there was a market for its product because Incredible Auto was the only Kia MotorsAmerica (“KIA”) dealership in a 250-300 mile radius. However, the Incredible Auto on paper was not the same ...


In Re Crabtree & Evelyn: "Almost Washed Up", Kristina Chuck, Lin Ye Apr 2010

In Re Crabtree & Evelyn: "Almost Washed Up", Kristina Chuck, Lin Ye

Chapter 11 Bankruptcy Case Studies

Crabtree and Evelyn (“C&E”) started in 1972 as an outlet of fine soaps from all over the globe. The name was derived from the crabapple tree and John Evelyn who was a Renaissance Englishman who had works on the conservation of forests and timber. Over the almost forty years since then it has expanded what it has to offer from fine soaps to a variety of other products including “personal care products and related accessories, fragrances, comestibles (i.e., food products including cookies, teas and jams), products for the home and gift arrangements.”

It also “manufactures and distributes more than twenty-five product lines, including LaSource®, Gardeners, India Hicks Island Living® and Naturals and its products have been frequently mentioned in numerous magazines, including Vogue, Glamour, and Lucky.” Since opening its first retail store in 1977, C&E has expanded to 126 stores (at petition date) and has added a manufacturing and distributing facility. In 1996, 100 percent of its equity was purchased by Kuala Lumpur Kepong Berhad (“KLK”), a “Malaysian public limited liability company, the stock of which is publicly traded on the Kuala Lumpur stock exchange.”

C&E sells its products through multiple channels, including its retail stores (56%), wholesale business (12%), export business (5%), affiliate sales (21%), and the internet (6%). Among them, firstly, as previously mentioned, C&E operates 126 stores in 34 states some of which were full-price merchandise and outlet stores. The outlet stores sell “larger quantity …, discontinued … and slow moving product[s].” Secondly, C&E sells its products through “gift shops, home specialty stores and country stores” including Hallmark. C&E also uses affiliates to distribute its products. These affiliates rely on C&E to supply them with the goods for purchase. Most of these goods are already finished; however, there are some that need to be packaged by the affiliates. There are over 130 C&E retail stores outside of the United States that are operated by C&E affiliates. C&E also exports its products to various gift stores in Mexico, Panama, Japan, and Taiwan. Finally, C&E’s customers are able to obtain its products on its website, www.crabtree-evelyn.com. C&E is able to track its customers using the information from a database. The website “offers internet-only promotions, provides customers with the opportunity to sign up to obtain exclusive email-only ...


Tragedy On The Descent: The Ascent And Fall Of Eddie Bauer, Austin Fleming, Bryan C. Hathorn Apr 2010

Tragedy On The Descent: The Ascent And Fall Of Eddie Bauer, Austin Fleming, Bryan C. Hathorn

Chapter 11 Bankruptcy Case Studies

For many entrepreneurs, bankruptcy is the unfortunate end of what began as a business dream. The birth of a business is an exciting time for the entrepreneur, but its death is often a painful process—both for the company's owners and its creditors. Those businesses that choose not to reorganize close their doors forever. However, reorganization can often salvage a business enterprise that is a good one but is impaired by debt, crisis, or simple bad luck.

The goals of the reorganization process are clear—the idea is to produce a viable business enterprise but one not necessarily owned ...


Active Ride Shop : Chapter 11 Bankruptcy, Matt Fink, Philip Meyer Apr 2010

Active Ride Shop : Chapter 11 Bankruptcy, Matt Fink, Philip Meyer

Chapter 11 Bankruptcy Case Studies

In 2008, hundreds of people waited in the rain for the grand opening of Active Ride Shop’s new Chico Hills location, its twenty-sixth store and its biggest opening event yet. In the same year, Active was awarded the Surf Industry Men’s Retailer of the Year Award, yet less than a year later the company would file for chapter 11 protection. This paper will explore Active’s financial downturn and resulting chapter 11 case, inform the reader about the workings of the chapter 11 process, and impart an understanding of how the process works in the context of a ...


Appalachian Oil Company, Inc.: A Company's Journey After Running Out Of Gas, Allison S. Jackson, Raymond G. Lewallen Jr., Jennifer T. Mcginn Apr 2010

Appalachian Oil Company, Inc.: A Company's Journey After Running Out Of Gas, Allison S. Jackson, Raymond G. Lewallen Jr., Jennifer T. Mcginn

Chapter 11 Bankruptcy Case Studies

When Appalachian Oil Company, Inc. filed for Chapter 11 protection on February 9, 2009, it marked the end of an era for a company with more than eighty-six years of experience in the petroleum products industry. The company’s failure was attributable to a couple of factors, including the worst financial crisis since the Great Depression and a parasitic parent company. The combination of a lack of operating income and access to credit rendered the company insolvent and unable to continue its operations. Appalachian Oil Company, Inc.’s journey through Chapter 11, however, was unique in that it never reemerged ...


A Reappraisal Of Attorneys' Fees In Bankruptcy, Michelle A. Cecil Jan 2010

A Reappraisal Of Attorneys' Fees In Bankruptcy, Michelle A. Cecil

Faculty Publications

This Article attempts to create a new method for approaching the priority of attorneys’ fees in bankruptcy. It criticizes Lamie for not going far enough toward resolving the attorneys’ fees issue, and proposes a statutory amendment to the Bankruptcy Code that will harmonize the interests of both creditors and debtors who are seeking bankruptcy protection during these difficult economic times.


The Costs Of Bapcpa: Report Of The Pilot Study Of Consumer Bankruptcy Cases, Lois R. Lupica Jan 2010

The Costs Of Bapcpa: Report Of The Pilot Study Of Consumer Bankruptcy Cases, Lois R. Lupica

Faculty Publications

Substantial changes were made to the consumer bankruptcy system with the enactment of BAPCPA. These changes, however, were enacted without data support for, or recognition of how such changes would affect the cost of accessing the bankruptcy system. The Costs of BAPCPA Pilot Study undertook a review of the costs of the consumer bankruptcy system following BAPCPA's enactment, to determine if costs were increased, and if so, whether these costs were passed on to the consumer. The issue of "costs" distills the question of what attorneys are charging consumers to represent them under the new regime. Thus a study ...


Trusts Versus Corporations: An Empirical Analysis Of Competing Organizational Forms, A. Joseph Warburton Jan 2010

Trusts Versus Corporations: An Empirical Analysis Of Competing Organizational Forms, A. Joseph Warburton

College of Law - Faculty Scholarship

This paper studies the effects of organizational form on managerial behavior and firm performance, from an empirical perspective. Managers of trusts are subject to stricter fiduciary responsibilities than managers of corporations. This paper examines the ramifications empirically, by exploiting data generated by a change in British regulations in the 1990s that allowed mutual funds to organize as either a trust or a corporation. I find evidence that trust law is effective in curtailing opportunistic behavior, as trust managers charge significantly lower fees than their observationally equivalent corporate counterparts. Trust managers also incur lower risk. However, evidence suggests that trust managers ...


Bankruptcy Materials And Cases, Third Edition, David G. Epstein Jan 2010

Bankruptcy Materials And Cases, Third Edition, David G. Epstein

Law Faculty Publications

Bankruptcy impacts so many aspects of what lawyers do, from business transactions to consumer protection to litigation of domestic relations matters. Understanding bankruptcy is thus critically important for almost every lawyer. To meet this challenge, we want you to learn the basics of debtorcreditor law, to become familiar with the issues of debtor-creditor law that you are likely to encounter in practice, and to think about the policy questions that underlie those issues. While policy questions are consistently and constantly raised, the book does not espouse any particular theory or philosophy of debtor-creditor law. You are left to develop your ...


Bankruptcy Federalism: A Doctrine Askew, Margaret Howard Jan 2010

Bankruptcy Federalism: A Doctrine Askew, Margaret Howard

Scholarly Articles

No abstract provided.


Ideas, Interests And Institutions And The History Of Canadian Bankruptcy Law 1867-1880, Thomas G. W. Telfer Jan 2010

Ideas, Interests And Institutions And The History Of Canadian Bankruptcy Law 1867-1880, Thomas G. W. Telfer

Law Publications

Michael Trebilcock's scholarship has long recognized the importance of ideas, interests, and institutions in shaping policy. Taking the same analytical approach that Michael Trebilcock and Ninette Kelley use in their ground-breaking book on the history of Canadian immigration, which focuses on economic interests, contested ideas, and institutions, this article examines the Canadian historical experience to gain an understanding of the ideas, interests, and institutions that have been influential in shaping the evolution of Canadian bankruptcy law. Specifically, the article addresses the rise of Canadian bankruptcy legislation in the early post-Confederation period and its ultimate repeal in 1880. Bankruptcy law ...


Single Asset Real Estate And Development Projects: The Kara Homes Mistake, Marshall E. Tracht Jan 2010

Single Asset Real Estate And Development Projects: The Kara Homes Mistake, Marshall E. Tracht

Articles & Chapters

The Kara Homes decision held that various affiliates of Kara Homes, Inc., each of which owned a separate real estate project, were "single asset real estate" ("SARE'') cases under the Bankruptcy Code's definition. According to the author of this article, the designation as single asset real estate substantially increased the difficulty faced by the debtors in maintaining their reorganization efforts, and has given lenders and their counsel a significant amount of comfort. However, the definition runs against the actual wording of the Bankruptcy Code, the intent underlying the SARE provisions, and the political winds. It should, and may well ...


Ask The Professor: Portfolio Margining – How Will Dodd-Frank Impact Its Utilization?, Ronald Filler Jan 2010

Ask The Professor: Portfolio Margining – How Will Dodd-Frank Impact Its Utilization?, Ronald Filler

Articles & Chapters

This article analyzes the background and current status of portfolio margining, how it has evolved over the past several years, and how the recent Dodd-Frank Act will impact its utilization and effectiveness. Portfolio margining allows a broker-dealer to analyze a client's total overall portfolio from a risk-based analytical model, establishing the proper minimum initial margin requirements for the entire portfolio applying certain parameters. To be a more effective tool, changes to the U.S. Bankrupcty Code were needed. The Dodd-Frank Act made those legislative changes. It's now up to the regulators to make portfolio margining an even more ...


Ask The Professor: How Does The U.K. Client Money Rules Differ From The U.S. Customer Segregated Rules When The Custodian Firm Fails To Treat Customer Property Properly?, Ronald Filler Jan 2010

Ask The Professor: How Does The U.K. Client Money Rules Differ From The U.S. Customer Segregated Rules When The Custodian Firm Fails To Treat Customer Property Properly?, Ronald Filler

Articles & Chapters

No abstract provided.


Anna Nicole Smith Goes Shopping: The New Forum-Shopping Problem In Bankruptcy, G. Marcus Cole, Todd J. Zywicki Jan 2010

Anna Nicole Smith Goes Shopping: The New Forum-Shopping Problem In Bankruptcy, G. Marcus Cole, Todd J. Zywicki

Journal Articles

In the United States, relations between debtors and their creditors are governed by two distinct legal regimes. For the overwhelming majority of credit relationships, state law of contract, property, tort, and consumer protection set up the framework within which the debtor-creditor relationship is established, functions, and in the end, is dissolved. In a smaller but significant number of these relationships, a different forum orchestrates the end of these relationships, namely, federal bankruptcy court. These two distinct forums for debtor-creditor relations coexist side by side, with some disputes moving over time from one forum to the other. As with any system ...


Simon Transportation Services, Inc., Will Holloway, Eliot Kerner, J. Paul Singleton Jan 2010

Simon Transportation Services, Inc., Will Holloway, Eliot Kerner, J. Paul Singleton

Chapter 11 Bankruptcy Case Studies

No abstract provided.


Collective Bargaining Agreements In Corporate Reorganizations, Andrew B. Dawson Jan 2010

Collective Bargaining Agreements In Corporate Reorganizations, Andrew B. Dawson

Articles

Congress enacted § 1113 to the Bankruptcy Code in 1984 in order to establish a standard for the rejection of Collective Bargaining Agreements. But the statute's ambiguous language has caused a split between the Second and Third Circuits, and has precipitated a lengthy academic debate largely centered on the interpretation of one word: "necessary." This debate has focused on proper statutory interpretation as well as deeper concerns regarding the policy goals behind the Bankruptcy Code. The present study reports data that indicate that the different interpretations are irrelevant in practice. No matter how "necessary" is defined, the result is always ...


Yellowstone Mountain Club, Benjamin Signer, Paul Wehmeier, Joseph Whelan Jan 2010

Yellowstone Mountain Club, Benjamin Signer, Paul Wehmeier, Joseph Whelan

Chapter 11 Bankruptcy Case Studies

No abstract provided.


Virtual Territoriality, Edward J. Janger Jan 2010

Virtual Territoriality, Edward J. Janger

Faculty Scholarship

No abstract provided.


Virtual Territoriality, Edward J. Janger Jan 2010

Virtual Territoriality, Edward J. Janger

Faculty Scholarship

No abstract provided.


Government Involvement In Chrysler Bankruptcy: The Least-Worst Alternative?, John A. E. Pottow Jan 2010

Government Involvement In Chrysler Bankruptcy: The Least-Worst Alternative?, John A. E. Pottow

Articles

As usual, my colleague Jim White has hit many nails on many heads. Also as usual, however, I’m going to be a pain and part ways with him a bit. First, was Chrysler’s bankruptcy “suspicious” in its use of section 363 of the Bankruptcy Code? You bet. Leaving aside the proliferation of 363 sales to swallow Chapter 11 as we once knew it, Chrysler was out in left field. Not only was it a “sale” of everything meaningful in the company, it was to a seller—Fiat—that put in no money. (To be fair, Fiat agreed to ...


Chrysler's Bankruptcy: Money Laundering On A Grand Scale, James J. White Jan 2010

Chrysler's Bankruptcy: Money Laundering On A Grand Scale, James J. White

Articles

The interesting issue in Chrysler is not the lawyers’ manipulation of the law; it is the politicians’ use of the bankruptcy to launder money. Had the President simply announced that the federal government would give $4 billion to the UAW, the public, even the public in the UAW’s home state of Michigan, would have been up in arms. By laundering the money through the Chapter 11 process, the administration disguised the payment and avoided the outrage.


Through Gritted Teeth And Clenched Jaw: Court-Initiated Sanctions In Bankruptcy Opinions, Nancy B. Rapoport Jan 2010

Through Gritted Teeth And Clenched Jaw: Court-Initiated Sanctions In Bankruptcy Opinions, Nancy B. Rapoport

Scholarly Works

This article discusses what types of behavior can trigger a bankruptcy court's initiation of sanctions against an attorney.


Rethinking Professional Fees In Chapter 11 Cases, Nancy B. Rapoport Jan 2010

Rethinking Professional Fees In Chapter 11 Cases, Nancy B. Rapoport

Scholarly Works

This article discusses the many ways in which professional fees can spiral out of control in chapter 11 bankruptcy cases and evaluates the possible ways to monitor and control those fees.


Panel 3: Bankruptcy & Restructuring Of Financial Institutions, Barry E. Adler, William A. Ackman, Marcia L. Goldstein, Arthur J. Gonzalez, Michael J. Krimminger, Edward R. Morrison Jan 2010

Panel 3: Bankruptcy & Restructuring Of Financial Institutions, Barry E. Adler, William A. Ackman, Marcia L. Goldstein, Arthur J. Gonzalez, Michael J. Krimminger, Edward R. Morrison

Faculty Scholarship

Barry Adler: Thank you all for being here. It is an honor for me to be on this panel and an honor to moderate it. Let me introduce our panel before we get started. William A. Ackman, the founder and CEO of Pershing Square Capital Management; Marsha Goldstein, a partner and chair of the business finance and restructuring department at Weil, Gotshal; the Honorable Arthur Gonzalez, a judge in the U.S. Bankruptcy Court for the Southern District of New York; and Ed Morrison, the Harvey Miller Professor of Law and Economics at Columbia Law School. Also on this panel ...


Saving Up For Bankruptcy, Ronald J. Mann, Katherine Porter Jan 2010

Saving Up For Bankruptcy, Ronald J. Mann, Katherine Porter

Faculty Scholarship

Bankruptcy is a numbers game. Policymaking, public perception, and the scholarly literature are captivated with the number of annual bankruptcy filings, which hit one million in 2008. The number of annual bankruptcy filings has become a barometer of economic health, reflecting an implicit assumption that bankruptcy is a useful proxy for financial distress.

But at the level of the individual family, the causative relation between financial distress and bankruptcy filings is unclear. On the one hand, only a fraction of those in serious financial distress will ever file for bankruptcy. For example, a study by Michelle White examined a group ...