Law Commons^™

Unethical Protection? Model Rule 1.8(H) And Plan Releases Of Professional Liability, George Kuney

Scholarly Works

The American Bar Association’s Model Rules of Professional Conduct address the propriety of attorneys obtaining releases from their clients of either past claims or future claims against themselves. Under the applicable Model Rule, both types of releases require the involvement, or the opportunity for involvement, of independent counsel to review and advise the client on the issue.

Releases in chapter 11 plans typically cover insiders, members of the creditors’ committee, and the debtor’s and committee’s counsel. Few courts or disciplinary bodies of the various state bars have addressed the ethical issues that arise when counsel insert into a plan of …

Unethical Protection? Model Rule 1.8(H) And Plan Releases Of Professional Liability, George Kuney

College of Law Faculty Scholarship

The American Bar Association’s Model Rules of Professional Conduct address the propriety of attorneys obtaining releases from their clients of either past claims or future claims against themselves. Under the applicable Model Rule, both types of releases require the involvement, or the opportunity for involvement, of independent counsel to review and advise the client on the issue.Releases in chapter 11 plans typically cover insiders, members of the creditors’ committee, and the debtor’s and committee’s counsel. Few courts or disciplinary bodies of the various state bars have addressed the ethical issues that arise when counsel insert into a plan of reorganization …

Creditor Control And Conflict In Chapter 11, Kenneth M. Ayotte, Edward R. Morrison

Faculty Scholarship

We analyze a sample of large privately and publicly held businesses that filed Chapter 11 bankruptcy petitions during 2001. We find pervasive creditor control. In contrast to traditional views of Chapter 11, equity holders and managers exercise little or no leverage during the reorganization process. 70 percent of CEOs are replaced in the two years before a bankruptcy filing, and few reorganization plans (at most 12 percent) deviate from the absolute priority rule to distribute value to equity holders. Senior lenders exercise significant control through stringent covenants, such as line-item budgets, in loans extended to firms in bankruptcy. Unsecured creditors …

Is The Bankruptcy Code An Adequate Mechanism For Resolving The Distress Of Systemically Important Institutions?, Edward R. Morrison

Faculty Scholarship

The President and members of Congress are considering proposals that would give the government broad authority to rescue financial institutions whose failure might threaten market stability. These systemically important institutions include bank and insurance holding companies, investment banks, and other "large, highly leveraged, and interconnected" entities that are not currently subject to federal resolution authority. Interest in these proposals stems from the credit crisis, particularly the bankruptcy of Lehman Brothers. That bankruptcy, according to some observers, caused massive destabilization in credit markets for two reasons. First, market participants were surprised that the government would permit a massive market player to …

Chrysler, Gm And The Future Of Chapter 11, Edward R. Morrison

Faculty Scholarship

Although they caused great controversy, the Chrysler and GM bankruptcies broke no new ground. They invoked procedures that are commonly observed in modern Chapter 11 reorganization cases. Government involvement did not distort the bankruptcy process; it instead exposed the reality that Chapter 11 offers secured creditors – especially those that supply financing during the bankruptcy case – control over the fate of distressed firms. Because the federal government supplied financing in the Chrysler and GM cases, it possessed the creditor control normally exercised by private lenders. The Treasury Department found itself with virtually the same, unchecked power that the FDIC …