Bankruptcy Law Commons^™

Procedural Incrementalism: A Model For International Bankruptcy, John A. E. Pottow

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The headline-grabbing business failures of late have brought increased attention to the relatively unresolved area of multinational bankruptcies. Parmalat, Global Crossing, and United Airlines are among the few international juggernauts that have foundered. In the financial meltdowns of these cross-border institutions, assets and creditors are dispersed throughout commercial environments that rarely end neatly at national borders. There has been heated debate, both in scholarly literature and the practical battlefield, over how best to resolve these transnational insolvencies, and there is nothing yet approaching a consensus. Reform efforts of various stripes have almost uniformly failed to gain meaningful international support. At …

Intellectualizing Property: The Tenuous Connections Between Land And Copyright, Stewart E. Sterk

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Increased use of the intellectual property label to describe copyright and related areas of law has spawned analogies to the protections afforded real property. These analogies ignore significant differences between the foundations that undergird real and intellectual property rights. In particular, real property rights operate to avoid breaches of the peace and tragedies of the commons - problems that do not arise with intellectual works - while copyright and other intellectual property rights are designed to provide an incentive to create, an incentive irrelevant when land is at issue. These disparities in justification caution against routine importation of real property …

Death And Resurrection Of Secured Credit, James J. White

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The Bankruptcy Reform Act of 1978 (the Code) posed palpable threats to secured creditors. It was drafted by a commission that was at least as concerned with the rights of debtors as with the rights of creditors. It was modified and adopted by a Congress that might have been the most liberal since World War II and signed into law by President Carter at the apogee of the left's power, two years before the Reagan election that marked the rise of the right and the beginning of the left's decline. The power of the left was exerted most forcefully on …

Bankruptcy's Acephalous Moment: Postpetition Transfers Under The Bankruptcy Code, David G. Carlson

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No abstract provided.

Bankrupting Trademarks, Xuan-Thao Nguyen

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The explosive growth of technology in the last two decades has vastly expanded intellectual property jurisprudence and elevated intellectual property to a heightened status in the marketplace. Indeed, a company's intellectual property assets may now be its most valuable corporate assets. Moreover, the property value of some trademarks is significantly greater than that of the trademark owner's physical assets.

The term “intellectual property” is commonly understood to include patents, trade secrets, copyrights, and trademarks. Yet a paradigm has been constructed and enforced over the last fifteen years wherein only patents, trade secrets, and copyrights are included. The paradigm specifically excludes …

The Logical Structure Of Fraudulent Transfers And Equitable Subordination, David G. Carlson

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No abstract provided.

Enron At The Margin, William H. Widen

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No abstract provided.

Surcharge And Standing: Bankruptcy Code Section 506(C) After Hartford Underwriters, David G. Carlson

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The Supreme Court's decision in Hartford Underwriters Insurance Co. v. Union Planters Bank, N.A., which limited standing under 11 U.S.C. § 506(c) to bankruptcy trustees, fails to conclusively resolve the issue of who can bring such claims. The ruling creates legal complexities, as it does not fully address ownership of the proceeds or provide clear guidance, leading to potential workarounds by secured creditors and trustees. The article argues that the decision may be circumvented, and the current framework for handling § 506(c) claims remains unsatisfactory, necessitating further legislative or judicial clarification.

Letters Of Credit, Voidable Preferences, And The Independence Principle, William H. Widen, David Gray Carlson

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No abstract provided.

Letters Of Credit, Voidable Preferences, And The "Independence" Principle, David G. Carlson, William H. Widen

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The article challenges the traditional application of the independence principle in letters of credit within bankruptcy law, arguing that courts have misapplied this principle, leading to rulings that unfairly protect creditors. The authors propose treating the issuance of a letter of credit as a transfer of the debtor's property, making it subject to voidable preference rules under federal bankruptcy law. They advocate for a reinterpretation of the earmarking doctrine and suggest legislative action to clarify the treatment of letters of credit in bankruptcy, ensuring fairness and consistency in the legal framework.

The Earmarking Defense To Voidable Preference Liability: A Reconceptualization, William H. Widen, David Gray Carlson

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No abstract provided.

The Earmarking Defense To Voidable Preference Liability: A Reconceptualization, David G. Carlson, William H. Widen

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The article argues that the earmarking doctrine, a judge-created exception to 547b liability, should be reinterpreted under 547c1 of the Bankruptcy Code. It posits that the doctrine's current reliance on vague concepts like "control" is legally unsound and inconsistent with statutory intent. By aligning earmarking with the contemporaneous exchange defense under 547c1, the analysis would focus on the parties' intent and the timing of the exchange, eliminating the need for the controversial control criterion. This approach would bring clarity and consistency to bankruptcy law, preventing arbitrary outcomes and ensuring compliance with the Bankruptcy Code.

Bankruptcy's Organizing Principle, David G. Carlson

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No abstract provided.

The Slippery Slope To Bankruptcy - Should Some Claimants Get A 'Carve-Out' From Secured Credit? No: It's A Populist Craving For A Petit Bourgeois Valhalla, James J. White

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In 1996, Professor Elizabeth Warren made a proposal to the American Law Institute and the Drafting Committee for Article 9 for a “20 percent set aside” for unsecured claimants. As I understand it, her proposal would amend Section 9-301 of Article 9 (the section that now implicitly subordinates a lien creditor to a prior perfected secured creditor).

Corporate Judgement Proofing: A Response To Lynn Lopucki's 'The Death Of Liability', James J. White

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In "The Death of Liability" Professor Lynn M. LoPucki argues that American businesses are rendering themselves judgment proof.- Using the metaphor of a poker game, Professor LoPucki claims American businesses are increasingly able to participate in the poker game without putting "chips in the pot." He argues that it has become easier for American companies to play the game without having chips in the pot because of the ease with which a modern debtor can grant secured credit, because of the growth of the peculiar form of sale known as asset securitization, because foreign havens for secreting assets are now …

Voidable Preferences And Proceeds: A Reconceptualization, David G. Carlson

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The article examines the complexities surrounding voidable preferences and proceeds in bankruptcy law, particularly when a secured creditor holds a floating lien on a debtor's assets. It argues that payments made by the debtor to unsecured creditors using encumbered funds can be recovered by the bankruptcy trustee as voidable preferences, provided the creditor cannot trace the funds back to their trust property. The analysis critiques existing case law and proposes that the voidable preference right is never part of the debtor's estate, instead being held by the trustee. The article also challenges the notion that good faith purchasers should retain …

Minority Protection In Residential Private Governments, Stewart E. Sterk

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The article explores the balance between majority rule and minority protections in community associations, drawing parallels with corporate governance to address conflicts and self-dealing issues. It argues that while market forces and self-interest often mitigate harmful majority actions, legal safeguards are necessary to protect minority interests, particularly when idiosyncratic value is at stake. The article advocates for express protections in governing documents and the use of supermajorities to limit association power, emphasizing that courts should invalidate redistributive actions without compensation.

The Virtue Of Speed In Bankruptcy Proceedings, James J. White

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In my opinion the principal difficulty with Chapter 11 is that it gives strong incentives to various Chapter 11 players to distort the priorities that were intended by Congress.

Bifurcation Of Undersecured Claims In Bankruptcy, David G. Carlson

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The article examines the legal implications of the Supreme Court's decision in Dewsnup v. Timm on the bifurcation of undersecured claims in bankruptcy law. It critiques the ruling for creating confusion and potential inequities, arguing that it may diverge from the intent of the Bankruptcy Code. The analysis highlights the need for clearer guidelines to ensure consistent and fair treatment of secured and unsecured claims across different bankruptcy chapters.

Rights Of Subrogation In Letters Of Credit Transactions, James J. White

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The past twenty years have seen more than a dozen cases, in which parties to letter of credit transactions have sought subrogation to the rights of the person they have paid or to the rights of the persons on behalf of whom, they have acted.' The most obvious case arises when the issuer of a standby letter of credit pays a beneficiary on a debt that is owed to the beneficiary by a bankrupt applicant. Having failed to take 'collateral from the applicant, the issuer seeks to be subrogated to the security interest of the beneficiary. Failing subrogation, the issuer …

Rents In Bankruptcy, David G. Carlson

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The article examines the treatment of rent receivables in bankruptcy proceedings, focusing on the tension between secured creditors' rights and the trustee's powers. It argues that rent receivables should be treated as security interests rather than absolute transfers to prevent unfair forfeitures and ensure debtors can use these funds for reorganization under adequate protection.

Harvey's Silence (Symposium: Letters To The Commission), James J. White

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Harvey Miller has a reputation as a leading bankruptcy lawyer, and he deserves it. As his criticism shows, he understands why and how the Code changed the Act in 1978 and how the drafters of Chapter 11 erred. Better than all but a handful of other lawyers, Harvey Miller knows how to manipulate Chapter 11 to serve his clients' interests. He understands both the legal and practical intricacies of Chapter 11. Were I the CEO of a large and troubled company, I would hire Harvey Miller and gladly pay him twice what most other bankruptcy lawyers would charge. In short, …

Security Interests In The Crucible Of Voidable Preference Law, David G. Carlson

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In this article, Professor David Gray Carlson analyzes the intersection of voidable preference law under 11 U.S.C. § 547 and security interests under Article 9 of the Uniform Commercial Code. The essay purports to articulate the metaphysical assumptions present in this intersection, no matter how rarified and peculiar, because, in this area of law, even the slightest and most fantastic metaphysical presupposition can change results and shift wealth between debtors and creditors. Given the current dearth of unsecured dividends in bankruptcy proceedings, everything turns on whether security interests survive the critique of voidable preference law. In his treatment, Professor Carlson …

Artificial Impairment And The Single Asset Chapter 11 Case, David G. Carlson

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The article critiques the use of Chapter 11 bankruptcy for single asset real estate cases, arguing that the doctrine of artificial impairment undermines the purpose of Chapter 11 by allowing creditors to bypass valuation and unfairly dismiss cases without merit. It contends that the repeal of section 1124(3) in 1994 has created uncertainty about the viability of artificial impairment as a tactic, while courts and creditors continue to grapple with the classification and treatment of claims in these cases.

Lien Stripping After Nobelman, Jane K. Winn

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This Article first examines the Supreme Court's holding in Nobelman. Part II reviews the various statutory interpretations and bankruptcy policy arguments marshaled by both debtors and creditors regarding the permissibility of stripping home mortgages under the Bankruptcy Code. Part III discusses the issue of lien stripping as addressed in the bankruptcy reform legislation introduced in Congress in 1992 and 1993. Part IV of this Article reviews other similar forms of debtor relief in order to evaluate creditors' claims that lien stripping would disrupt credit markets and impair the free flow of credit to borrowers. The forms of debtor relief …

The Classification Veto In Single-Asset Cases Under Bankruptcy Code Section 1129(A)(10), David G. Carlson

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No abstract provided.

Postpetition Security Interests Under The Bankruptcy Code, David G. Carlson

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Section 364(c) and (d) of the Bankruptcy Code provides for the creation of security interests in real and personal property under federal law. In this Article, David Gray Carlson discusses the quality and nature of these federal security interests, their remarkable immunity from reversal on appeal, and the ability of postpetition lenders to obtain preferences over other creditors through "cross-collateralization" clauses and the like.

Preference Conundrums, James J. White, Daniel Israel

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Every law teacher and many law students and practitioners understand the intellectual sport to be found in Section 547 on preference law. Because the preference rules are so intricate, rigorously logical-but really not logical-they command more than their fair attention, not only in law school but also in continuing legal education and even in the courts. Our purpose in this article is not to answer any of the difficult questions or to give a global explanation of preference law. Rather it is to confront a few of the conundrums in Section 547 and to follow the paths of those conundrums …

Revising Article 9 To Reduce Wasteful Litigation, James J. White

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For reasons that are unclear to me, the committees reviewing the articles of the Uniform Commercial Code and drafting revisions are congenitally conservative. Perhaps these committees take their charge too seriously, namely, to revise, not to revolutionize. Perhaps their intimate knowledge of the subject matter exaggerates the importance of each section and consequently magnifies the apparent size of every change. In any case, my own experience with two such committees tells me that the members quickly become focused on revisions and amendments that any outsider would describe as modest. To the extent that the revision of any of the articles …

The Use Of Advance Fee Attorney Retainer Agreements In Bankruptcy: Another Special Law For Lawyers?, Lester Brickman, Jonathan Klein

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From the time that the first lawyers set foot in what is now the United States, society has engaged in efforts to regulate lawyers' fees, including fees received from clients in bankruptcy proceedings. Lawyers, in turn, have been engaged in continuing efforts to: secure their self-interests, aggrandize their role in society, be free of societally imposed constraints on their fees and activities, and carve out an ever larger area of exclusive domain. Although lawyers have not fared as well in their recent efforts to extend the scope of their monopoly by the use of statutes that prohibit the unauthorized practice …