Law Commons^™

Helping Families Save Their Homes: The Role Of Bankruptcy Law: Hearing Before The S. Comm. On The Judiciary, 110th Cong., Nov. 19, 2008 (Statement Of Professor Adam Levitin, Geo. U. L. Center), Adam J. Levitin

Testimony Before Congress

No abstract provided.

Sense And Sensibility In Securitization: A Prudent Legal Structure And A Fanciful Critique, Thomas E. Plank

Scholarly Works

This article responds to a recent critique that the securitization of receivables is a legally shaky financial product that survives only because it is too big to fail. This critique argues that securitization's success in avoiding the costs that the Bankruptcy Code imposes on secured credit, including a bankruptcy trustee's ability to use the cash collateral from the receivables, is a type of fraud that hinders or delays the creditors of the originators of receivables. The critique, however, fails. The cases cited for the author's fraud analysis do not support its thesis. Further, the critique fails to demonstrate that securitization's …

Toward A More Reasoned Approach To The Priority Of Attorneys' Fees In Bankruptcy, Michelle A. Cecil

Michelle A. Cecil

The current mortgage foreclosure crisis, coupled with the country’s economic downturn and escalating consumer costs, have combined to place a crippling burden on the nation’s bankruptcy system. During difficult economic times such as this, it is imperative that the bankruptcy system operate efficiently, as it provides a social safety net for both consumers and businesses. Unfortunately, there are many issues of statutory interpretation left unanswered in the Bankruptcy Code, and these issues have placed an increased burden on the country’s bankruptcy courts. This Article seeks to resolve one thorny issue of statutory interpretation: the treatment of attorneys’ fees in bankruptcy. …

Let's Get It Straight: The Effect Of Fehribach, The Ha2003 Liquidating Trust, And Joyce On A Debtor's Pre-Bankruptcy Professionals And Where To Go From Here, Jamie L. Johnson

Seventh Circuit Review

The Seventh Circuit has recently decided a trilogy of cases in which stockholders or creditors attempted to hold a business’s professionals—such as financial advisors and investment bankers—liable for the losses they suffered as a result of the business’s bankruptcy or financial demise. In all three of the cases, Fehribach v. Ernst & Young LLP, The HA2003 Liquidating Trust v. Credit Suisse Securities (USA) LLC, and Joyce v. Morgan Stanley & Co., the Seventh Circuit declined to hold the professionals liable, thereby eliminating a potential “deep pocket” for the creditors or stockholders. The outcomes of these cases were …

Toward A More Reasoned Approach To The Priority Of Attorneys' Fees In Bankruptcy, Michelle A. Cecil

Michelle A. Cecil

The current mortgage foreclosure crisis, coupled with the country’s economic downturn and escalating consumer costs, have combined to place a crippling burden on the nation’s bankruptcy system. During difficult economic times such as this, it is imperative that the bankruptcy system operate efficiently, as it provides a social safety net for both consumers and businesses. Unfortunately, there are many issues of statutory interpretation left unanswered in the Bankruptcy Code, and these issues have placed an increased burden on the country’s bankruptcy courts. This Article seeks to resolve one thorny issue of statutory interpretation: the treatment of attorneys’ fees in bankruptcy. …

The Effect Of 2005 Bankruptcy Reform On Credit Card Industry Profits And Prices, Michael N. Simkovic

Michael N Simkovic

The U.S. Bankruptcy code changed dramatically with the passage of The Bankruptcy Abuse Prevention and Consumer Protection Act Of 2005. This act increased the costs and decreased the benefits of bankruptcy to consumers. Supporters of the law claimed that it would benefit consumers as well as creditors, because reducing the losses faced by creditors would lower the cost of credit to consumers. Critics of the law depicted it as special interest legislation designed to profit credit card companies at the expense of consumers. This study tests whether the 2005 Bankruptcy Reform: (1) reduced the number of bankruptcies; (2) reduced credit …

Ripping Off Grandma And Grandpa Without Hurting The Banks Of America: Allowing The Elderly And Other Easy Prey To Pay For The Crimes Of Immoral Individuals And Institutions, Brett D. Maxfield

Brett D Maxfield

This paper looks at the abuses of the banks of America in the ways they influence the law of credit and debt collection and what can be done to reform the system.

The Doctrine Of Necessity In Bankruptcy Reorganizations, Rahul K. Sharma

Rahul K. Sharma

Necessity is an old concept used in many fields of law. In criminal law and torts, it is a defense. In property law, its reasoning is used to support eminent domain. This paper will analyze the use of the doctrine of necessity in bankruptcy reorganizations. In bankruptcy, necessity has also been used as a justification for paying certain creditors earlier than they would have otherwise been paid. This has become controversial as such payments became routine. A decision by the Seventh Circuit in the 2004 Kmart case strongly criticized such payments and criticized reliance upon the doctrine of necessity. This …

Misbehavior And Mistake In Bankruptcy Mortgage Claims, Katherine Porter

Katherine Porter

The greatest fear of many families in serious financial trouble is that they will lose their homes. Bankruptcy offers a last chance for families to save their homes by halting a foreclosure and by repaying any default on their mortgage loans over a period of years. Mortgage companies participate in bankruptcy by filing claims with the court for the amount of the mortgage debt. To retain their homes bankruptcy debtors must pay these amounts. This process is well-established and, until now, uncontroversial. The assumption is that the protective elements of the federal bankruptcy shield vulnerable homeowners from harm.

This Article …

Bankruptcy Vérité, Lynn M. Lopucki, Joseph W. Doherty

Michigan Law Review

In the empirical study we report in Bankruptcy Fire Sales, we compared the recoveries from the going-concern bankruptcy sales of twenty-five large, public companies with the recoveries from the bankruptcy reorganizations of thirty large, public companies. We found that, controlling for the asset size of the company and its presale or pre-reorganization earnings ("EBITDA"), reorganization recoveries were more than double sale recovenes. We are honored that Professor James J. White has chosen to comment on our study. White is an eloquent defender of the status quo, pulls no punches, and always has something interesting to say. Bankruptcy Noir is …

Attorneys As Debt Relief Agencies: Constitutional Considerations, Marisa Terranova

Fordham Journal of Corporate & Financial Law

No abstract provided.

Identifying And Keeping The Genie In The Bottle: The Practical And Legal Realities Of Trade Secrets In Bankruptcy Proceedings, Sharon Sandeen

Faculty Scholarship

Anyone who has been paid attention to developments in the world of business over the past quarter century can attest to the fact that intellectual property (IP) is a hot commodity. Indeed, in contrast to the companies that emerged out of the Industrial Revolution, the companies that have spawned as part of the so-called “Information Age” attribute much of their value and future prospects to intangible, rather than tangible, assets. Unfortunately, while bankruptcy courts have generally recognized the need to distinguish between tangible and intangible assets, particularly when determining whether a claim is secured or unsecured, they often fail to …

Section 524(G) Without Compromise: Voting Rights And The Asbestos Bankruptcy Paradox, S. Todd Brown

Journal Articles

Section 524(g) of the Bankruptcy Code was adopted to protect unknown future asbestos personal injury victims' rights and prospects for financial recovery. To serve these goals and satisfy the demands of due process, Section 524(g) provides two basic forms of virtual representation for future victims - requiring the appointment of an independent legal representative and aligning the interests of future victims with current claimants (75% of whom must approve any plan that invokes Section 524(g)). In recent years, however, the 75% super-majority vote requirement has been transformed into a veto power wielded by a small group of law firms, who …

The Effect Of The 2005 Bankruptcy Reforms On Credit Card Company Profits And Prices (2), Michael N. Simkovic

Michael N Simkovic

The U.S. Bankruptcy code changed dramatically with the passage of The Bankruptcy Abuse Prevention and Consumer Protection Act Of 2005. This act increased the costs and decreased the benefits of bankruptcy to consumers. Supporters of the law claimed that it would benefit consumers as well as creditors, because reducing the losses faced by creditors would lower the cost of credit to consumers. Critics of the law depicted it as special interest legislation designed to profit credit card companies at the expense of consumers. This study tests whether the 2005 Bankruptcy Reform: (1) reduced the number of bankruptcies; (2) reduced credit …

Designing The Limits Of Creditworthiness. Insolvency In Antwerp Bankruptcy Legislation And Practice (16th-17th Centuries), Dave De Ruysscher

Dave De ruysscher

In 1516 and 1518, the Antwerp City Council introduced a collective system of debt recovery, which was partly derived from academic doctrine and which broke with the tradition of priority for the first seizing claimant. The new views were inserted into a legal framework that was based on the concept of publicly known insolvency. Because of the vague legal definitions in the 1582 and 1608 Antwerp law compilations, the position of pursuing creditors was strengthened. Although these rules weren't successful, they demonstrate an early intention to draw the line between criminal bankruptcy, persisting insolvency and temporary payment problems.

Making Sense Of Nation-Level Bankruptcy Filing Rates, Ronald J. Mann

Ronald Mann

No abstract provided.

Patterns Of Credit Card Use Among Low And Moderate Income Households, Ronald J. Mann

Ronald Mann

This chapter uses data from the Federal Reserve Board’s Survey of Consumer Finances for 2004 (the “SCF”) to examine the penetration of credit cards into LMI markets. The chapter has two purposes. First, I discuss the rise of the modern credit market, emphasizing the segmentation of product lines based on behavioral and financial characteristics of customer groups. Among other things, that trend involves the use of products aimed at LMI households that differ significantly from those aimed at middle-class households. Second, I describe the extent to which LMI households borrow on credit cards, the types of LMI households that borrow, …

Home Ownership Beyond A Subprime Crisis: The Role Of Delinquency Management, Melissa B. Jacoby

Melissa B. Jacoby

No abstract provided.

Trends In Distressed Debt Investing: An Empirical Study Of Investors' Objectives, Michelle M. Harner

Faculty Scholarship

Increased creditor control in chapter 11 cases has generated considerable debate over the past several years. Proponents of creditor control argue that, among other things, it promotes efficiency in corporate reorganizations. Critics assert that it destroys corporate value and frequently forces otherwise viable entities to liquidate. The increasing involvement of professional distressed debt investors in chapter 11 cases has intensified this debate. In this article, I present and analyze empirical data regarding the investment practices and strategies of distressed debt investors. Based on this data and actual case reports, I reach two primary conclusions. First, although relatively few in number, …

In Re Davis, Adam Schlusselberg

NYLS Law Review

No abstract provided.

Selling It First, Stealing It Later: The Trouble With Trademarks In Corporate Transactions In Bankruptcy, Xuan-Thao Nguyen

Articles

Why does AI get two bites of the “Apple” trademark? Should AI be allowed to grant the right to use the trademark “perpetual and exclusive” with the sale of the music division and steal it back for free, ten years later? This article is part of an ongoing and broader inquiry into the intersection of trademark, contract and bankruptcy laws. This article argues that recent bankruptcy decisional law, notably the In re Exide Technologies decision, misunderstands the “perpetual and exclusive” trademark transaction, deeming it as an ordinary “license” when it is truly an outright sale. This article explains that the …

Can The Trustee Recover? Imputation Of Fraud To Bankruptcy Trustees In Suits Against Third-Party Service Providers, Samuel C. Wasserman

Fordham Law Review

Corporate fraud has become a familiar headline over the last decade and has forced several companies whose managers have committed that fraud to file for bankruptcy. In these cases, a trustee will often be appointed to represent and manage the bankruptcy estate. This trustee is vested with the rights of the debtor corporation upon filing and may try to sue third-party service providers (e.g., accounting firms, law firms, investment banks) for conspiring in, or negligently failing to detect, the fraud. Federal and state courts have disagreed over whether the bankruptcy trustee should be permitted to recover damages from these third …

The Corporate Governance And Public Policy Implications Of Activist Distressed Debt Investing, Michelle M. Harner

Fordham Law Review

Activist institutional investors traditionally have invested in a company's equity to try to influence change at the company. Some of these investors, however, are now purchasing a company's debt for this same purpose. They may seek to change a company's management and board personnel, operational strategies, asset holding, or capital structure. The Chapter 11 bankruptcy cases of Allied Holdings, Inc. and its affiliates exemplify the stategies of activist distressed debt investors. In the Allied cases, Yucaipa Companies, a distressed debt investor, puchased approximately 66% of Allied's outstanding general unsecured bond debt. Yucaipa used this debt position to exert significant influence …

Get Sick, Get Out: The Medical Causes Of Home Mortgage Foreclosures, Christopher Robertson, Richard Egelhof, Michael Hoke

Faculty Scholarship

In recent years, there has been national alarm about the rising rate of home foreclosures, which now strike one in every 92 households in America and which contribute to even broader macroeconomic effects. The "standard account" of home foreclosure attributes this spike to loose lending practices, irresponsible borrowers, a flat real estate market, and rising interest rates. Based on our study of homeowners going through foreclosures in four states, we find that the standard account fails to represent the facts and thus makes a poor guide for policy. In contrast, we find that half of all foreclosures have medical causes, …

(Almost) Everything We Learned About Pleasing Bankruptcy Judges, We Learned In Kindergarten, Nancy B. Rapoport, Roland Bernier Iii

Scholarly Works

In this essay, we demonstrate that most ethics violations (at least the ones that irritate bankruptcy judges) are also violations of simple rules of behavior that people should have learned in kindergarten.

A Study Of Consumers' Post Discharge Finances: Struggle, Stasis, Or Fresh Start?, Lois R. Lupica, Jay L. Zagorsky Ph.D.

Faculty Publications

The postwar U.S. has experienced an extremely sharp rise in consumer bankruptcies. What happens to these consumers financially after filing for bankruptcy? Do filers catch up with their non-filing peers, stay a constant distance behind or fall further behind over time? This question is investigated empirically using a new set of financial and bankruptcy data obtained from a large national random survey of bankruptcy filers and non-filers. Along some simple financial dimensions, such as car ownership, bankruptcy filers are not disadvantaged compared to non-filers. Along more complex indicators, such as total income and net worth, filers catch up over time …

An Empirical Investigation Into Appellate Structure And The Perceived Quality Of Appellate Review, Rafael I. Pardo, Jonathan Remy Nash

Scholarship@WashULaw

Commentators have theorized that several factors may improve the process, and thus perhaps the accuracy, of appellate review: (1) review by a panel of judges, (2) subject-matter expertise in the area of the appeal, (3) other law-finding ability, (4) adherence to traditional notions of appellate hierarchy, and (5) the judicial independence of appellate judges. The considerable discussion that has expounded upon these theories has occurred in a vacuum of abstract generalization. This Paper adds a new dimension by presenting results from an empirical study of bankruptcy appellate opinions issued over a three-year period. The federal bankruptcy appellate structure provides certain …

Illness And Inability To Repay: The Role Of Debtor Health In The Discharge Of Educational Debt, Rafael I. Pardo

Scholarship@WashULaw

For a debtor to obtain a discharge of student loans in bankruptcy, the debtor must establish that their repayment would impose an undue hardship. This Article presents the results of an empirical study of bankruptcy court doctrine over a ten-year period that involved undue hardship discharge proceedings where the court reported information on the debtor's health status, monthly household income, and monthly household expenses. The data show that a medical condition increased a debtor's odds of being granted a discharge by 140% but that household income and expense levels did not have a statistically significant association with legal outcome. These …

The Corporate Governance And Public Policy Implications Of Activist Distressed Debt Investing, Michelle M. Harner

Faculty Scholarship

Activist institutional investors traditionally have invested in a company's equity to try to influence change at the company. Some of these investors, however, are now purchasing a company's debt for this same purpose. They may seek to change a company's management and board personnel, operational strategies, asset holdings or capital structure. The chapter 11 bankruptcy cases of Allied Holdings, Inc. and its affiliates exemplify the strategies of activist distressed debt investors. In the Allied cases, Yucaipa Companies, a distressed debt investor, purchased approximately 66% of Allied's outstanding general unsecured bond debt. Yucaipa used this debt position to exert significant influence …

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 …