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Full-Text Articles in Law

Bankruptcy Fiduciaries, Christopher D. Hampson Jan 2024

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 …


In Whose Interests Should A Company Be Run? Fiduciary Duties Of Directors During Corporate Failure In India: Looking To The West For Answers, Gautam Sundaresh May 2019

In Whose Interests Should A Company Be Run? Fiduciary Duties Of Directors During Corporate Failure In India: Looking To The West For Answers, Gautam Sundaresh

Michigan Business & Entrepreneurial Law Review

This Comment looks at the debate as it has played out in the legal jurisprudence of the U.S. and the U.K. The analysis of each considers the three financial stages of a corporation’s existence that are specifically addressed in the debate today, i.e.: (i) solvency; (ii) insolvency; and (iii) the zone of insolvency. After setting out the current position, this Comment specifically addresses the various shortcomings and criticisms of the models adopted by each jurisdiction and offers observations on the status quo and the implementation of these models. On this basis, this Comment goes on to propose a model to …


Fiduciary Principles In Bankruptcy And Insolvency, John A.E. Pottow May 2019

Fiduciary Principles In Bankruptcy And Insolvency, John A.E. Pottow

Book Chapters

This chapter examines fiduciary duties in bankruptcy and insolvency, focusing on the bankruptcy trustee’s duties, which are triggered by virtue of appointment in a case. It first provides a background on bankruptcy law in order to elucidate the doctrines and rules affecting fiduciary responsibilities in bankruptcy, citing a number of relevant provisions in the Bankruptcy Code. It then considers the fiduciary, non-fiduciary, and anti-fiduciary obligations of the trustee under the Bankruptcy Code before discussing the fiduciary duties of care and loyalty. In particular, it highlights bankruptcy-related issues raised by the duty of loyalty with respect to secured creditors, priority unsecured …


Fiduciary Principles In Bankruptcy And Insolvency, John A. E. Pottow Jan 2019

Fiduciary Principles In Bankruptcy And Insolvency, John A. E. Pottow

Book Chapters

This chapter examines fiduciary duties in bankruptcy and insolvency, focusing on the bankruptcy trustee’s duties, which are triggered by virtue of appointment in a case. It first provides a background on bankruptcy law in order to elucidate the doctrines and rules affecting fiduciary responsibilities in bankruptcy, citing a number of relevant provisions in the Bankruptcy Code. It then considers the fiduciary, non-fiduciary, and anti-fiduciary obligations of the trustee under the Bankruptcy Code before discussing the fiduciary duties of care and loyalty. In particular, it highlights bankruptcy-related issues raised by the duty of loyalty with respect to secured creditors, priority unsecured …


Bankruptcy Fiduciary Duties In The World Of Claims Trading, John A.E. Pottow Oct 2018

Bankruptcy Fiduciary Duties In The World Of Claims Trading, John A.E. Pottow

Articles

In earlier work, I explored the role of fiduciary duties in the bankruptcy trustee's administration of a debtor's estate, noting the absence of any explicit demarcation of those duties in the Bankruptcy Code. In this piece, I report the highlights of that analysis and see to what extent (if any) fiduciary duties can inform policy prescriptions for the issue of bankruptcy claims trading, colorfully referred to by some as the world of "bankruptcy M&A." My initial take is pessimistic. Fiduciary duties, at least as traditionally conceived in bankruptcy, are unlikely to provide much help. But there is still a source …


Disciplining Corporate Boards And Debtholders Through Targeted Proxy Access, Michelle M. Harner Jan 2016

Disciplining Corporate Boards And Debtholders Through Targeted Proxy Access, Michelle M. Harner

Faculty Scholarship

Corporate directors committed to a failed business strategy or unduly influenced by the company’s debtholders need a dissenting voice—they need shareholder nominees on the board. This article examines the bias, conflicts, and external factors that impact board decisions, particularly when a company faces financial distress. It challenges the conventional wisdom that debt disciplines management, and it suggests that, in certain circumstances, the company would benefit from having the shareholders’ perspective more actively represented on the board. To that end, the article proposes a bylaw that would give shareholders the ability to nominate directors upon the occurrence of predefined events. Such …


Directors' Duties In Failing Firms, Kelli A. Alces, Larry E. Ribstein Jan 2007

Directors' Duties In Failing Firms, Kelli A. Alces, Larry E. Ribstein

Scholarly Publications

Despite many cases with seemingly contrary dicta, corporate directors of failing firms do not have special duties to creditors. This follows from the nature of fiduciary duties and the business judgment rule. Under the business judgment rule, the directors have broad discretion to decide what to do and in whose interests to act. There is some authority for a limited creditor right to sue on behalf of the corporation to enforce this duty. However, any such right does not make the duty one owed to creditors. The creditors individually may sue the corporation for breach of specific contractual, tort, and …


Managers' Fiduciary Duties In Financially Distressed Corporations: Chaos In Delaware (And Elsewhere), Christopher W. Frost, Rutheford B. Campbell Apr 2006

Managers' Fiduciary Duties In Financially Distressed Corporations: Chaos In Delaware (And Elsewhere), Christopher W. Frost, Rutheford B. Campbell

ExpressO

In this article, the authors consider the nature of corporate managers’ fiduciary duties in periods when the company is in financial distress. This matter is important not only to corporate managers, who need clear rules regarding their duties, but also to equity and debt investors, who must understand the nature of corporate fiduciary duties in order to price the capital that they contribute to the enterprise and allocate the financial risks of loss to the most efficient risk bearer from among the investors.

Unfortunately, courts – especially the important Delaware courts – have made a mess of all of this. …


Fiduciary Duties Of Officers And Directors Of Distressed Corporations, Royce De R. Barondes Oct 1998

Fiduciary Duties Of Officers And Directors Of Distressed Corporations, Royce De R. Barondes

Faculty Publications

This Article argues that this widely-accepted premise for analyzing the incentives created by various alternative structures of federal bankruptcy law is suspect.


Bankruptcy -Trustee's Liability - Effect Of Requirement Of Deposit In Designated Depositary On Trustee's Common Law Duty Of Due Care, Russel T. Walker Jun 1939

Bankruptcy -Trustee's Liability - Effect Of Requirement Of Deposit In Designated Depositary On Trustee's Common Law Duty Of Due Care, Russel T. Walker

Michigan Law Review

In a suit to charge a trustee in bankruptcy for the loss of funds of the bankrupt estate caused by insolvency of the depositary bank, the trustee contended that as he had fulfilled the requirement of section 61 of the Bankruptcy Act by depositing the funds of the estate in a "designated depositary," he could not be charged with liability for any loss occurring thereafter; he argued that section 61 repealed, by implication, the trustee's common-law duty of due care in the handling of estate funds after they were deposited in a "designated depositary." Held, the fact that the …