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Full-Text Articles in Law
International Financial Law: The Case Against Close-Out Netting, Vincent R. Johnson
International Financial Law: The Case Against Close-Out Netting, Vincent R. Johnson
Faculty Articles
In financial transactions today, a practice called “close-out netting” plays a key role in controlling and allocating risks. If anchored in the parties’ chosen contractual language and recognized by law, close-out netting can circumvent normal bankruptcy processes by providing for the acceleration of mutual obligations and the efficient calculations and settlement of the net balance. When correctly implemented, close-out netting can eliminate the risk that arises under ordinary bankruptcy principles.
Despite the support for close-out netting by lenders, scholars, regulators, and policy makers, a few attentive observers of financial law argue that close-out netting is unsound, and the argument against …
Expanding The Ponzi Scheme Presumption, David R. Hague
Expanding The Ponzi Scheme Presumption, David R. Hague
Faculty Articles
Ponzi schemes and other investment frauds inevitably end up in bankruptcy or receivership, leaving behind numerous victims—many of whom invested their life savings in the scheme without any knowledge of its fraudulent nature. Although trustees and receivers can sometimes recover some of the fraudulently acquired funds from the assets of the perpetrators, in most cases, those assets fall woefully short of the victims’ losses. This leads to fraudulent transfer lawsuits (claw-back actions) against those who are suspected to have profited from the wrongdoing.
A transfer is fraudulent if it was made with the actual intent to defraud, but actual fraud …