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Full-Text Articles in Law
Bankruptcy Fiduciaries, Christopher D. Hampson
Bankruptcy Fiduciaries, Christopher D. Hampson
UF Law Faculty Publications
Does social enterprise end with insolvency? Is bankruptcy all about the bottom line? The answer to these questions begins with understanding the estate in bankruptcy and the fiduciaries that control its fate. Yet the law of fiduciary duties in bankruptcy is undertheorized, conflicted, and muddled. After almost fifty years of confusion, this Article provides the first comprehensive examination of the nature and source of fiduciary duties in bankruptcy. Although the Supreme Court has intoned “maximize the value of the estate” as a shorthand, I argue that the trustee’s duty of obedience in reorganization cases gives rise to a “duty to …
Bespoke, Tailored, And Off-The-Rack Bankruptcy: A Response To Professor Coordes's 'Bespoke Bankruptcy', Christopher D. Hampson
Bespoke, Tailored, And Off-The-Rack Bankruptcy: A Response To Professor Coordes's 'Bespoke Bankruptcy', Christopher D. Hampson
UF Law Faculty Publications
Toward the end of every semester that I teach bankruptcy, I let my students vote on which “non-traditional” insolvency regimes they would like to study, including municipal bankruptcy, sovereign bankruptcy, and financial institutions. What I am really trying to do is convey to the students that the default procedures and substantive rules in Chapters 7 and 11 of the U.S. Bankruptcy Code do not apply to all types of enterprises.
Bankruptcy & The Benefit Corporation, Christopher D. Hampson
Bankruptcy & The Benefit Corporation, Christopher D. Hampson
UF Law Faculty Publications
As pressure grows for money-making businesses to prioritize social responsibility, the benefit corporation - a recent innovation in corporate governance - promises to require the directors of socially minded businesses to balance public benefit with shareholder interests. But will that promise survive the crucible of financial distress? While most discussions of the benefit corporation give only passing treatment to insolvency (or ignore it altogether), this Article provides the first complete analysis of how bankruptcy principles would apply to benefit corporations, informed by the practical context of out-of-court workouts and negotiations that take place in the shadow of the bankruptcy laws. …
Changes In Chapter 11 Success Levels Since 1980, Lynn M. Lopucki
Changes In Chapter 11 Success Levels Since 1980, Lynn M. Lopucki
UF Law Faculty Publications
This Article revisits the nine measures of success that Bill Whitford and I reported on in Patterns in the Bankruptcy Reorganization of Large, Publicly Held Companies, with twenty-six additional years of experience and data on 964 additional cases. My principal objective has been to determine whether Chapter 11 has become more or less successful by those measures. I conclude that Chapter 11 has become less successful by three of the seven LoPucki-Whitford criteria for which data are available. The courts confirm plans in a significantly smaller proportion of cases, a significantly smaller proportion of companies survive, and a significantly smaller …
Bankruptcy Survival, Lynn M. Lopucki, Joseph W. Doherty
Bankruptcy Survival, Lynn M. Lopucki, Joseph W. Doherty
UF Law Faculty Publications
Of the large, public companies that seek to remain in business through bankruptcy reorganization, only 70% succeed. The assets of the other 30% are absorbed into other businesses. Success is important both because it is efficient and it preserves jobs, communities, supplier and customer relationships, and tax revenues. This Article reports the findings of the first comprehensive study of the division into successful and failed reorganizations. Eleven conditions best predict companies’ survival prospects. First, a company that even hints in the press release announcing its bankruptcy that it intends to sell its business is highly likely to fail. Second, reorganizations …
House Swaps: A Strategic Bankruptcy Solution To The Foreclosure Crisis, Lynn M. Lopucki
House Swaps: A Strategic Bankruptcy Solution To The Foreclosure Crisis, Lynn M. Lopucki
UF Law Faculty Publications
Since the price peak in 2006, home values have fallen more than 30%, leaving millions of Americans with negative equity in their homes. Until the Supreme Court’s 1993 decision in Nobelman v. American Savings Bank, the bankruptcy system would have provided many such homeowners with a remedy. They could have filed bankruptcy, discharged the negative equity, committed to pay the mortgage holders the full values of their homes, and retained those homes. In Nobelman, the Court misinterpreted reasonably clear statutory language and invented legislative history to resolve a 3-1 split of circuits in favor of the minority view. The Court …
Optimizing English And American Security Interests, Lynn M. Lopucki, Arvin I. Abraham, Bernd P. Delahaye
Optimizing English And American Security Interests, Lynn M. Lopucki, Arvin I. Abraham, Bernd P. Delahaye
UF Law Faculty Publications
Since the adoption of Uniform Commercial Code Article 9 in American jurisdictions in the 1960s, scholars have debated the desirability of the extraordinary priority given to secured creditors. Through a point-by-point comparison of English and American security interests, this article provides a new perspective on that long-running debate. The comparison reveals that security functions in strikingly similar manners in the two jurisdictions, while differing sharply in one crucial respect. In contrast to the absolute priority given secured creditors under American law, English law subordinates floating charges to administrative expenses, preferential creditors, and a prescribed share for unsecured creditors. Other, less …
Water Bankruptcy, Christine A. Klein
Water Bankruptcy, Christine A. Klein
UF Law Faculty Publications
Many western states are on the verge of bankruptcy, with debts exceeding assets. And yet, they continue to take on additional debt through contracts and other commitments. Although this distress sounds like an outgrowth of the 2008 recession, this crisis involves water, not money. In particular, the problem concerns the western prior appropriation system of water law, which allocates the right to use water under the priority principle of “first in time, first in right.” In many states, the system is so “over-allocated” that it promises to deliver annually much more water than nature provides. The crisis will deepen as …
Court-System Transparency, Lynn M. Lopucki
Court-System Transparency, Lynn M. Lopucki
UF Law Faculty Publications
This article applies systems analysis to two ends. First, it identifies simple changes that would make the court system transparent. Second, it projects transparency's consequences. Transparency means that both the patterns across, and details of, case files are revealed to policymakers, litigants, and the public in easily understood forms. Government must make two changes to achieve court system transparency. The first is to remove the existing restrictions on the electronic release of court documents, including the requirements for registration, separate requests for each document, and monetary payment. The second - already being implemented in the federal courts - is to …
Bankruptcy Vérité, Lynn M. Lopucki, Joseph W. Doherty
Bankruptcy Vérité, Lynn M. Lopucki, Joseph W. Doherty
UF Law Faculty Publications
In Bankruptcy Fire Sales, 106 Michigan Law Review 1 (2007), we compared the recoveries from the going-concern bankruptcy sales of 25 large, public companies with the recoveries from the bankruptcy reorganizations of 30 large, public companies in the same period. We found that, controlling for the asset size of the company and its pre-sale or pre-reorganization earnings (EBITDA), reorganization recoveries were more than double sale recoveries. In Bankruptcy Noir, a reply forthcoming in the Michigan Law Review, Professor James J. White values the same set of companies differently to reach the finding that the sale recoveries are not statistically significantly …
Bankruptcy Fire Sales, Lynn M. Lopucki, Joseph W. Doherty
Bankruptcy Fire Sales, Lynn M. Lopucki, Joseph W. Doherty
UF Law Faculty Publications
For more than two decades, scholars working from an economic perspective have criticized the bankruptcy reorganization process and sought to replace it with market mechanisms. In 2002, Professors Douglas G. Baird and Robert K. Rasmussen asserted in The End of Bankruptcy, an article published in the Stanford Law Review, that improvements in the market for large, public companies had rendered reorganization obsolete. Going concern value could be captured through sale. This article reports the results of an empirical study comparing the recoveries in bankruptcy sales of large public companies in the period 2000-2004 with the recoveries in bankruptcy reorganizations during …
Courting Failure, Lynn M. Lopucki
Courting Failure, Lynn M. Lopucki
UF Law Faculty Publications
Courting Failure is the story of a bad venue statute that led to rampant forum shopping by large public companies. This forum shopping induced competition among bankruptcy courts for the cases. That competition in turn caused the unnecessary failure of many of the reorganizing companies and corrupted the United States Bankruptcy Courts. Congress has not acted to fix the statute because of Delaware's parochial interest in preserving the status quo.
Where Do You Get Off? A Reply To Courting Failure'S Critics, Lynn M. Lopucki
Where Do You Get Off? A Reply To Courting Failure'S Critics, Lynn M. Lopucki
UF Law Faculty Publications
By historical accident, the bankruptcy venue statute gives large public companies their choice of bankruptcy courts. Over three decades a competition for those cases has developed among some United States Bankruptcy Courts. The most successful courts - Delaware and New York - today attract more than two thirds of the billion-dollar-and-over cases. The courts compete principally because the cases represent a multi-billion dollar a year industry in professional fees alone, because local lawyers pressure judges to compete, and because judges who lose the competition are stigmatized and may not be reappointed. In February 2005, the University of Michigan Press published …
Delaware Bankruptcy: Failure In The Ascendancy, Lynn M. Lopucki, Joseph W. Doherty
Delaware Bankruptcy: Failure In The Ascendancy, Lynn M. Lopucki, Joseph W. Doherty
UF Law Faculty Publications
In 1990, the United States Bankruptcy Court for the District of Delaware - then a one-judge backwater - began competing for big bankruptcy cases. In six years, that court achieved a near monopoly. In 2000, LoPucki and Kalin discovered that 42% of the companies filing in Delaware during that six year period of ascendency refiled bankruptcy within five years of their emergence, as compared with only 6% of those filing in courts other than Delaware and New York. In a later study, we found the (1) the failure of the companies reorganized in Delaware during the period of ascendency was …
Why Are Delaware And New York Bankruptcy Reorganizations Failing?, Lynn M. Lopucki, Joseph W. Doherty
Why Are Delaware And New York Bankruptcy Reorganizations Failing?, Lynn M. Lopucki, Joseph W. Doherty
UF Law Faculty Publications
Why are Delaware and New York Bankruptcy Reorganizations Failing?
The Failure Of Public Company Bankruptcies In Delaware And New York: Empirical Evidence Of A "Race To The Bottom", Lynn M. Lopucki, Sara D. Kalin
The Failure Of Public Company Bankruptcies In Delaware And New York: Empirical Evidence Of A "Race To The Bottom", Lynn M. Lopucki, Sara D. Kalin
UF Law Faculty Publications
In the early 1990s, Delaware replaced New York as the jurisdiction of choice for the bankruptcy reorganization of large, public companies. In an empirical study of 188 companies emerging from bankruptcy reorganization from 1983 through 1996, the authors found that the refiling rates for public companies reorganized in Delaware and New York were about five to seven times the refiling rates for companies reorganized in other courts. Nine of the thirty large, public companies emerging in Delaware from 1991 to 1996 (30%) have already refiled. New York rates were higher during the period of New York's dominance than during the …
Hidden In Plain View: The Pension Shield Against Creditors, Patricia E. Dilley
Hidden In Plain View: The Pension Shield Against Creditors, Patricia E. Dilley
UF Law Faculty Publications
This Article examines the virtually unquestioned protection of retirement assets from creditors, in both state and federal law, with a view to determining whether tax qualification or even retirement itself is a sufficient rationale for preserving debtor assets in the face of creditors' claims, and if so, what the limits of such protection should be. The problems of current law stem in large part from the use of tax qualified status as a convenient shortcut for determining the appropriate bankruptcy treatment of retirement accounts. The result is a wide disparity in the treatment of debtors epitomized by the cases of …