Bankruptcy Law Commons^™

A New Role For Secondary Proceedings In International Bankruptcies, John A. E. Pottow

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Secondary proceedings-the ugly stepsisters to main proceedings-get short shrift in international bankruptcy scholarship. This article seeks to remedy that deficiency. First, it describes what it argues are the traditional conceptions-both stated and implicit-of secondary proceedings in international bankruptcies. Second, it offers a revised way of thinking about secondary proceedings, proposing to restrict their scope through the use of "synthetic" hearings. Third, it addresses some problems with the proposed new role of secondary proceedings and sketches a possible solution involving the creation of an international priorities registry.

Unveiling The Mystery, History, And Problems Associated With The Jurisdictional Limitations Of Bankruptcy Courts Over Personal Injury Tort And Wrongful Death Claims, Ishaq Kundawala

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The current jurisdictional structure of bankruptcy courts in the United States is nothing short of a mystery. Scholars, judges, and practitioners have long struggled with finding their way through the confusing labyrinth of jurisdictional rules, exceptions, and exclusions in our current bankruptcy system. Courts spend countless hours each year considering all kinds of jurisdictional issues that arise in bankruptcy cases. This results in a diversion of judicial resources from substantive matters. Adding to this quandary is the limited scope of bankruptcy courts' jurisdiction over a small but very significant subset of claims-personal injury tort and wrongful death claims-which weaves yet …

Financial Literacy Or Financial Castigation?, John A. E. Pottow

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This year, the Canadians- through their government-convened Task Force on Financial Literacy - have proudly produced, "Canadians and their Money: Building a Brighter Financial Future." Armed with 30 recommendations, its most dramatic innovation is to recommend the creation of a Financial Literacy Leader. I have been asked to provide an American perspective on this report specifically and the broader agenda of "financial literacy" more generally as a consumer welfare intervention. Let me start by acknowledging the critiques of the Canadian Task Force. For example, my Canadian colleague, Saul Schwartz, has already drafted a compelling analysis of the political economy behind …

The Federal Rules Of Bankruptcy Procedure In Reorganization Cases: Do They Have A Constitutional Dimension?, David G. Carlson

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The article examines the implications of the Supreme Court's decision in United Student Aid Funds, Inc. v. Espinosa, which significantly impacts bankruptcy law by establishing that due process in bankruptcy reorganization cases is governed by the minimalist standard set forth in Mullane v. Central Hanover Bank & Trust Co. This ruling undermines the constitutional dimension of the Bankruptcy Rules, strengthens the finality of reorganization plans under res judicata, and affects the discharge of student loans without an adversary proceeding. The decision highlights the tension between due process rights of creditors and the finality of bankruptcy court rulings, while also reshaping …

Collective Bargaining Agreements In Corporate Reorganizations, Andrew B. Dawson

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Congress enacted § 1113 to the Bankruptcy Code in 1984 in order to establish a standard for the rejection of Collective Bargaining Agreements. But the statute's ambiguous language has caused a split between the Second and Third Circuits, and has precipitated a lengthy academic debate largely centered on the interpretation of one word: "necessary." This debate has focused on proper statutory interpretation as well as deeper concerns regarding the policy goals behind the Bankruptcy Code. The present study reports data that indicate that the different interpretations are irrelevant in practice. No matter how "necessary" is defined, the result is always …

Chrysler's Bankruptcy: Money Laundering On A Grand Scale, James J. White

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The interesting issue in Chrysler is not the lawyers’ manipulation of the law; it is the politicians’ use of the bankruptcy to launder money. Had the President simply announced that the federal government would give $4 billion to the UAW, the public, even the public in the UAW’s home state of Michigan, would have been up in arms. By laundering the money through the Chapter 11 process, the administration disguised the payment and avoided the outrage.

Government Involvement In Chrysler Bankruptcy: The Least-Worst Alternative?, John A. E. Pottow

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As usual, my colleague Jim White has hit many nails on many heads. Also as usual, however, I’m going to be a pain and part ways with him a bit. First, was Chrysler’s bankruptcy “suspicious” in its use of section 363 of the Bankruptcy Code? You bet. Leaving aside the proliferation of 363 sales to swallow Chapter 11 as we once knew it, Chrysler was out in left field. Not only was it a “sale” of everything meaningful in the company, it was to a seller—Fiat—that put in no money. (To be fair, Fiat agreed to contribute technological know-how on …

The Role Of Valuation In Federal Bankruptcy Exemption Process: The Supreme Court Reads Schedule C, David G. Carlson

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In Taylor v. Freeland & Kronz, a debtor claimed a law suit was exempt. The bankruptcy trustee failed to object within the required period. Later, the law suit realized an amount that far exceeded the monetary limit to which the debtor was entitled. The Supreme Court permitted the debtor to keep all of the proceeds, even beyond the statutory limit, claiming that a deadline was a deadline. Recently, in Schwab v. Reilly, the Supreme Court overruled Taylor, holding that a claim to a monetarily limited item can only exempt the monetary limit. The Court tries and fails to "reconcile" these …

Modified Plans Of Reorganization And The Basic Chapter 13 Bargain, David G. Carlson

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A very large number of chapter 13 plans are confirmed each year. Unlike chapter 11 plans (for non-individuals), these plans may be revised after confirmation. The modification provisions of the Bankruptcy Code, however, give very little guidance as to what constitutes a permissible modification. In contrast, confirmation of the original plan is very carefully governed. This article theorizes that modification must honor the basic chapter 13 bargain. According to this bargain, the debtor is entitled to the bankruptcy estate and the creditors are entitled to net surplus income. The article assesses whether the diffuse and disorganized caselaw of modification adheres …

The Res Judicata Worth Of Illegal Bankruptcy Reorganization Plans, David G. Carlson

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The article examines the interplay between res judicata and the confirmation of bankruptcy reorganization plans, particularly under Chapter 13. It argues that while res judicata is essential for finality, it must not compromise procedural fairness and due process. The author advocates for a balanced approach where confirmed plans are binding but also ensure that creditors' rights are protected through proper legal procedures.

Interpreting Data: A Reply To Professor Pardo, Robert M. Lawless, Angela K. Littwin, Katherine M. Porter, John A. E. Pottow, Deborah K. Thorne, Elizabeth Warren

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Professor Pardo has published a pointed critique to our Report, raising three major complaints. First, he claims that we make two predicating assumptions in our study that are flawed. Second, he contends that we misunderstand the means test and fail to appreciate with sufficient "nuance" its "operative effect." Third, he maintains that our Report suffers from methodological problems. We can address the two impugned assumptions quickly. The first one - that BAPCPA's means test is the sole causal agent driving 800,000 putative filers from the bankruptcy courts - is not one we make. The second - regarding the income profiles …

The Chapter 13 Estate And Its Discontents, David G. Carlson

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Thirty years after the enactment of the Bankruptcy Code, the courts have yet to agree on a theory of the bankruptcy estate in Chapter 13 cases. This is not the fault of the courts. The Bankruptcy Code is contradictory as to the composition of the chapter 13 estate. This article selects one of four possible theories and defends it as the one that does the least violence to the plain meaning of the Bankruptcy Code.

This theory is referred to in this article as the "Divestment Theory," because it holds that, upon confirmation of a chapter 13 plan, the debtor …

Critique Of Money Judgment (Part Two: Liens On New York Personal Property), David G. Carlson

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The article critiques the New York Civil Practice Law and Rules (CPLR) for its outdated and overly complex framework governing money judgments, particularly in the creation, enforcement, and priority of judicial liens. It argues that the CPLR's inefficiencies and inconsistencies, exacerbated by conflicts with federal bankruptcy law and the Uniform Commercial Code (UCC), lead to unjust outcomes for both debtors and creditors. The article proposes modest reforms to align the CPLR with modern legal standards, simplify procedures, and eliminate unnecessary distinctions between tangible and intangible property.

Critique Of Money Judgment Part One: Liens On New York Real Property, David G. Carlson

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The article critically examines the enforcement of money judgments in New York, particularly focusing on liens on real property. It argues that the current system is outdated, arbitrary, and often unfair to creditors, highlighting the need for legislative reforms to create a more equitable and efficient framework. The analysis underscores the complexity and challenges faced by creditors and legal practitioners within the existing structure.

Report To The American Bankruptcy Institute: Prevalence Of Substantive Consolidation In Large Public Company Bankruptcies From 2000 To 2005, William H. Widen

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No abstract provided.

Bankruptcy Noir, James J. White

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In Bankruptcy Fire Sales, Professor LoPucki and Dr. Doherty do two things. First, they present provocative data about the relative payoff to be had in Chapter 11 by a full reorganization compared with the payoff from a section 363 sale without a full reorganization. Second, they give a yet more provocative explanation for their data. Taking a page from Professor LoPucki's recent book, they blame the meager return that they observe on 363 sales on the unprincipled behavior of the lawyers, managers, creditors, investment bankers, and even judges involved in the sales. Messrs. LoPucki and Doherty's data appear to …

Did Bankruptcy Reform Fail? An Empirical Study Of Consumer Debtors, Robert M. Lawless, Angela K. Littwin, Katherine M. Porter, John A. E. Pottow, Deborah K. Thorne, Elizabeth Warren

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Before 2005, many people went broke and many filed for bankruptcy. After 2005, many people still go broke, but not so many file for bankruptcy. Why has the number of bankruptcies declined? Surely it is not the economy. All throughout the 2000s, families have been under increasing economic pressure. Median family incomes have declined, basic expenses have risen, and families are shouldering unprecedented debt loads. Defaults remain high for credit cards and car loans, while mortgage foreclosures have soared. By 2008, over half of all Americans reported that their incomes were falling behind their cost of living. These data all …

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

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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 …

Means Testing: The Failed Bankruptcy Revolution Of 2005, David G. Carlson

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The monumental bankruptcy amendments of 2005 made means testing the very center of the attempt to restore discipline to consumer spending. Yet, one year of practical experiences shows that either the means test either promotes bankruptcy abuse, or it is meanginless, depending on whether courts think the mechanical means test pre-empts pre-2005 law, or whether it merely supplements it. This article explores the means test in details, shows why it is a flop, and what the courts have made of it so far.

Representing Victims Of Domestic Violence In Property Distribution Proceedings After The Bankruptcy Abuse Prevention And Consumer Protection Act Of 2005, Elizabeth Brandt

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No abstract provided.

Corporate Form And Substantive Consolidation, William H. Widen

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No abstract provided.

The Myth (And Realities) Of Forum Shopping In Transnational Insolvency, John A. E. Pottow

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A decade ago, in 1996, the landscape of transnational insolvencies was vastly different from today. The UNCITRAL Model Law had not been finished, the efforts at the E.U. Insolvency Treaty were jeopardized by mad cows, and no one had heard of Chapter 15. Now, all three universalist projects are up and running, putting universalism in a comfortable state of ascendancy. The paradigm has not been without critics, however, the most persistent and eloquent of which has been Professor Lynn LoPucki. LoPucki has periodically attacked universalism on a number of grounds. These grievances include a sovereigntist complaint of universalism's insensitivity to …

Private Liability For Reckless Consumer Lending, John A. E. Pottow

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Congress recently enacted amendments to the Bankruptcy Code that possess the overarching theme of cracking down on debtors due to the increasing rate at which individuals have been filing for bankruptcy. Taking into account the correlation between the overall rise in consumer credit card debt and the rate of individual bankruptcy filings, the author nevertheless hypothesizes that not all credit card debt is troubling. Instead, the author proposes that the catalyst driving individual bankruptcy rates higher than ever is the level of "bad credit"-or credit extended to individuals even though there is a reasonable likelihood that the individual will be …

The Nondischargeability Of Student Loans In Personal Bankruptcy Proceedings: The Search For A Theory, John A. E. Pottow

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In fiscal year 2002, approximately 5.8 million Americans borrowed $38 billion (USD) in federal student loans. This was more than triple the $11.7 billion borrowed in 1990. As a rule of thumb, tuition has been increasing at roughly double the rate of inflation in recent years. This troubling trend of accelerating tuition, coupled with the fact that real income has stagnated for men and increased only modestly for women over the past two decades, means that more and more students are going to need to turn to borrowed money to finance their degrees absent a radical restructuring of the postsecondary …

Prevalence Of Substantive Consolidation In Large Bankruptcies From 2000 To 2004: Preliminary Results, William H. Widen

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No abstract provided.

Greed And Pride In International Bankruptcy: The Problems Of And Proposed Solutions To 'Local Interests', John A. E. Pottow

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The collapses of Yukos, Parmalat, and other international juggernauts have focused scholarly attention on the failure of multinational enterprises. Even what one might consider "American" companies, such as Chicago-based United Airlines, have made clear in their restructuring plans that their operations have profound effects on the dozens of nations around the globe where they transact business. Government and quasi-government reform efforts to regulate these cross-border insolvencies have abounded, including among others, the UNCITRAL Model Law on Cross-Border Insolvency. UNCITRAL is also building on World Bank and INSOL efforts at promulgating a Legislative Guide for "best practices" bankruptcy codes. Scholars vary …

Abuse Prevention 2005, James J. White

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Today I do not debate the empirical question (what is the cause of the increase in bankruptcy filings?) nor do I address the buried moral question (who deserves the protection of bankruptcy law?). Rather, I speculate about the consequences of 2005 amendments to the Bankruptcy Code and about the reasons it will achieve or fail to achieve the goals of its sponsors. Along the way I hope to learn something about how law changes, or fails to change behavior.

The Totality Of The Circumstances Of The Debtor's Financial Situation In A Post-Means Test World: Trying To Bridge The Wedoff/Culhane & White Divide, John A. E. Pottow

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Bankruptcy Judge Eugene Wedoff and Creighton Law School professors Marianne Culhane and Michaela White engage in a spirited debate over a series of law review articles about the proper scope of motions to dismiss a debtor's petition under section 707(b) of the freshly revised Bankruptcy Code. It is an interesting and provocative dialogue, with both sides advancing their respective positions persuasively. As a result, I find myself in the unfortunate position of wanting to agree with both. Since that is impossible, however, this brief article is my attempt to find a middle ground between their two positions. It does so …

Cars And Homes In Chapter 13 After The 2005 Amendments To The Bankruptcy Code, David G. Carlson

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No abstract provided.

Ethical Issues In Asbestos Litigation, Lester Brickman

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Asbestos litigation has given rise to over 50,000,000 claims against 8400 former producers, distributors, installers and sellers of asbestos-containing products. To date, 850,000 claimants have sought compensation, costing businesses and insurance companies over $70 billion and resulting in more than 70 bankruptcies. Over 100,000 deaths are attributable to asbestos exposure with an additional 40,000 deaths anticipated over the next 30 years. Despite the significance of the ethical issues generated by the processes of acquiring, pressing and settling the most massive litigation in history, the legal literature is substantially devoid of any such discussion. One possible reason for this paucity of …