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Brooklyn Journal of Corporate, Financial & Commercial Law

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Full-Text Articles in Bankruptcy Law

Property, Recognition, And The Problem Of The Term “Debtor”: Rethinking Eligibility In Chapter 15 Cross-Border Insolvency, Jonathan Lent May 2026

Property, Recognition, And The Problem Of The Term “Debtor”: Rethinking Eligibility In Chapter 15 Cross-Border Insolvency, Jonathan Lent

Brooklyn Journal of Corporate, Financial & Commercial Law

Congress knows how to draft a property requirement. There is no such requirement for a Chapter 15 debtor to seek recognition of its foreign proceeding, yet there is a circuit split on the issue. In 2005, Congress enacted Chapter 15 through the Bankruptcy Consumer Protection and Consumer Act (“BAPCPA”). The Second Circuit in In re Barnet held that section 109(a), along with its property requirement, applies in a Chapter 15 case through section 103(a), which provides that Chapter 1 of the bankruptcy code applies to Chapter 15. The Eleventh Circuit, in In re Al Zawawi, relying on jurisprudence decided under …

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Missing Strugglers: Debt’S Reach, Bankruptcy’S Limits, And A Proxy For Who’S Left Out, Dalié Jiménez Dec 2025

Missing Strugglers: Debt’S Reach, Bankruptcy’S Limits, And A Proxy For Who’S Left Out, Dalié Jiménez

Brooklyn Journal of Corporate, Financial & Commercial Law

This essay uses Debt’s Grip as a point of departure to examine how debt operates as a system of social control in the United States. While the book offers a vivid portrait of those who file for bankruptcy, it also gestures toward a broader reality: millions of financially distressed individuals who never access relief. Drawing on legal scholarship and political theory, this Essay argues that debt disciplines individuals, fragments solidarity, and undermines democratic agency. It proposes a new metric—the ratio of debt collection lawsuits to bankruptcy filings—as a proxy for unmet need, revealing a population of “missing strugglers” visible to …

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Myth Busters: A Review Of “Debt’S Grip”, Susan Block-Lieb Dec 2025

Myth Busters: A Review Of “Debt’S Grip”, Susan Block-Lieb

Brooklyn Journal of Corporate, Financial & Commercial Law

Debt’s Grip follows a long line of literature that looks to combat legal and cultural myths about consumer debt and consumer bankruptcy with quantitative and qualitative analysis on these topics. Who files for bankruptcy and why? Fighting longstanding myths is tough work, but Pamela Foohey, Robert M. Lawless and Deborah Thorne have marshalled a strong set of tools, and strong intellectual allies, to support this epic battle.

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How And Why To Be A Strategic Debtor, Chrystin Ondersma Dec 2025

How And Why To Be A Strategic Debtor, Chrystin Ondersma

Brooklyn Journal of Corporate, Financial & Commercial Law

Shame and fear prevent many Americans who need debt relief from seeking it. Americans who struggle with debt should reject fear and shame and should instead feel empowered and entitled to seek relief in bankruptcy. Almost every American will need to take on debt at some point. We’re expected to use credit to acquire educations, homes, cars, and appliances—even medical care. Americans do not incur debt strategically, but rather as a matter of survival. In Dignity Not Debt, I argued that human dignity, not profits, should guide policymakers, and that our collective goal should be to end both survival debt …

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Power, Tools, And Process: Some Reflections On Bankruptcy Minimalism, Edward J. Janger Dec 2025

Power, Tools, And Process: Some Reflections On Bankruptcy Minimalism, Edward J. Janger

Brooklyn Journal of Corporate, Financial & Commercial Law

In Unjust Debts: How Our Bankruptcy System Makes America More Unequal, Melissa Jacoby offers a brilliant and sweeping indictment of the way in which bankruptcy law is currently practiced in the United States. As she puts it, “This book is a story of falling out of love. With a law.” Like me, Professor Jacoby came of professional age, at the close of the first age of the Bankruptcy Code. Enacted in 1978, we both learned the statute in the mid-1990s, at a time when the transformative power of the 1978 Code was reaching its peak. On the business side, corporations …

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Chapter 9 Bankruptcy: The Solution That Causes Problems, Peter C. Alexander Sep 2025

Chapter 9 Bankruptcy: The Solution That Causes Problems, Peter C. Alexander

Brooklyn Journal of Corporate, Financial & Commercial Law

There is a little-known form of bankruptcy called a “Chapter 9,” reserved for insolvent cities, villages, and other municipalities. Occasionally, one reads about a city or a county that has filed for Chapter 9 relief, like Detroit, Michigan, or Orange County, California; however, it is very hard to file a Chapter 9 case, in part, because existing law requires a municipality to obtain permission from its home state before it can file for relief in the U.S. Bankruptcy Court. An additional constraint is that the only option municipalities have when seeking bankruptcy relief is to file a Chapter 9 because …

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Untangling Bankruptcy’S Most Complex Web: Chapter 11 Rule 1111(B) And Subchapter V, Evan Sponder Dec 2024

Untangling Bankruptcy’S Most Complex Web: Chapter 11 Rule 1111(B) And Subchapter V, Evan Sponder

Brooklyn Journal of Corporate, Financial & Commercial Law

The United States Code Section 1111(b) provides an equitable remedy to debt restructuring for both debtors and creditors in Chapter 11 bankruptcy by allowing the debtor to retain their income-producing assets and repay their creditor(s) through a mutually approved plan. However, section 1111(b) is difficult for courts to apply due to its complex nature, and infrequent application of the section has resulted in limited development of case law interpreting the section. Courts currently interpret 1111(b) elections in Chapter 11 Subchapter V cases to exclude interest accrual; this interpretation establishes an inequitable precedent whereby debtors’ procedural advantages bypass creditor protections during …

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Sounds Of Silence: Codifying The Unimpaired Creditor’S Right To Post-Petition Interest At The Contract Rate, Matthew Killip Jun 2024

Sounds Of Silence: Codifying The Unimpaired Creditor’S Right To Post-Petition Interest At The Contract Rate, Matthew Killip

Brooklyn Journal of Corporate, Financial & Commercial Law

Capital markets, reliant on a framework of transactional predictability and legal surety, face a nuanced challenge arising from the U.S. Bankruptcy Code’s provisions for solvent debtors in Chapter 11 cases. This challenge is the precise methodology for calculating post-petition interest rates on claims of unimpaired, unsecured creditors—a calculation that hinges on whether to apply the contract, state law, or the federal judgment rate. Section 502(b)(2) of the Bankruptcy Code generally prohibits the accrual of interest after a bankruptcy filing. However, this ban is circumvented when the debtor is solvent—the so-called “solvent debtor exception.” This exception, stemming from pre-Bankruptcy Code practice, …

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Johnson & Johnson’S Dance With Bad Faith: A Look At How Large Corporations Utilize The Bankruptcy Code To Avoid Liability From Mass Tort Claims, Amy West Jun 2024

Johnson & Johnson’S Dance With Bad Faith: A Look At How Large Corporations Utilize The Bankruptcy Code To Avoid Liability From Mass Tort Claims, Amy West

Brooklyn Journal of Corporate, Financial & Commercial Law

Since Congress enacted the current Bankruptcy Code in 1978, large corporations have strategically used bankruptcy law to evade liability in mass tort claims. This Note examines three case studies illustrating such attempts. The first case involves Johnson & Johnson, which tried to use the so-called “Texas Two-Step” maneuver to circumvent liability for 38,000 pending talc-related lawsuits linked to injuries caused by its well-known Baby Powder. The second case is the Purdue Pharma bankruptcy. Purdue Pharma, the pharmaceutical manufacturer responsible for creating OxyContin, faces thousands of claims for strict liability, negligence, and failure to warn. The issue here is whether the …

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Punishing Debtors In Bankruptcy During Covid-19, David Y. Kamins Dec 2023

Punishing Debtors In Bankruptcy During Covid-19, David Y. Kamins

Brooklyn Journal of Corporate, Financial & Commercial Law

The 2019 Coronavirus Pandemic (COVID-19) led to widespread government-mandated lockdowns, causing numerous businesses to close their doors permanently. To assist financially distressed businesses and individuals during the pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The Small Business Administration (SBA)—the agency tasked with implementing the CARES Act—distributed funds to individuals and businesses through the Paycheck Protection Program (PPP). Part of the SBA’s eligibility requirements to receive funding through the PPP included an exclusion provision that barred debtors presently involved in any bankruptcy proceeding from receiving any PPP funding. Many debtors in bankruptcy filed suits in …

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Commercial Law Harmonization: The Past As Prologue—A “Festschrift” In Honor Of Neil B. Cohen, Edward J. Janger Dec 2022

Commercial Law Harmonization: The Past As Prologue—A “Festschrift” In Honor Of Neil B. Cohen, Edward J. Janger

Brooklyn Journal of Corporate, Financial & Commercial Law

No abstract provided.

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Reviving The Realist Restatements And The Common Law Codes: Neil Cohen And The Grand Style, Edward J. Janger Dec 2022

Reviving The Realist Restatements And The Common Law Codes: Neil Cohen And The Grand Style, Edward J. Janger

Brooklyn Journal of Corporate, Financial & Commercial Law

The “Second” Restatements and the Uniform Commercial Code have shaped the sensibility of lawyers and law students for the last half century. Both projects were anti-formal at their core, articulating pragmatic principles to guide judicial decision making without necessarily determining the outcome. Recent jurisprudence interpreting the Restatements, as well as efforts to update both sets of instruments, have taken a formalist turn. As examples, this essay will consider judicial interpretations of § 402A of the Restatement (Second) of Torts where internet platforms like Amazon are involved. Then it will consider the tortured and recently concluded experience in connection with the …

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Formulating Lists Of Factors: Lessons From The Good, The Bad, And The U.C.C., Stephen L. Sepinuck Dec 2022

Formulating Lists Of Factors: Lessons From The Good, The Bad, And The U.C.C., Stephen L. Sepinuck

Brooklyn Journal of Corporate, Financial & Commercial Law

No abstract provided.

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Looking Forward: Professor Roberta Karmel’S Prescient Views On The Transformation Of Self-Regulatory Organizations And Of The Securities Market Structure At The Turn Of The Last Century, James A. Fanto Dec 2021

Looking Forward: Professor Roberta Karmel’S Prescient Views On The Transformation Of Self-Regulatory Organizations And Of The Securities Market Structure At The Turn Of The Last Century, James A. Fanto

Brooklyn Journal of Corporate, Financial & Commercial Law

This essay examines Professor Roberta Karmel’s scholarship on the transformation of self-regulatory organizations (SROs) and the securities market structure, a transformation that occurred at the turn of the last century. It explains how she examined the events from the perspective of a lawyer who had a rich knowledge of the history of the SROs, the securities markets, and their regulation and how she provided a practical understanding of the way these markets worked. It points out that, rather than offering an overarching theory that would explain all of these developments and that would guide regulators and legislators in SRO and …

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Telling The Story On Your Timesheets: A Fee Examiner's Tips For Creditors' Lawyers And Bankruptcy Estate Professionals, Nancy B. Rapoport May 2021

Telling The Story On Your Timesheets: A Fee Examiner's Tips For Creditors' Lawyers And Bankruptcy Estate Professionals, Nancy B. Rapoport

Brooklyn Journal of Corporate, Financial & Commercial Law

This short (approx. 5,000 words) essay, which forms the basis of a keynote address to the Federal Bar Association that I’m doing next month, discusses how much of a lawyer’s embedded assumptions and cognitive errors can come across in something as simple as a time entry on a bill. So much can be revealed about how a lawyer views himself or herself in society and about the lawyer’s relationship with the client that it’s worth examining what we can find when we look at legal bills. One note, though: my writing style is informal and distinctive in that regard (especially …

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A Rejection Of Absolutist Duties As A Barrier To Creditor Protection: Facilitating Directorial Decisivness Surrounding Insolvency Through The Business Judgment Rule, Philip Gavin May 2021

A Rejection Of Absolutist Duties As A Barrier To Creditor Protection: Facilitating Directorial Decisivness Surrounding Insolvency Through The Business Judgment Rule, Philip Gavin

Brooklyn Journal of Corporate, Financial & Commercial Law

This Article draws attention to the difficulties that directors may face when seeking to discharge their duties as a corporation approaches insolvency, in particular when directors must discern the point at which a corporation has become insolvent. It argues that discretion allowed to directors by the business judgment rule will be crucial to overcoming these difficulties. To do this, this article examines the nature of duties owed by directors both before and after insolvency, and accepts the stance taken by Delaware courts in recent years towards an expansive understanding of a corporation’s interests upon insolvency. It then considers unresolved issues …

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Door Shut And Ears Plugged: How Consumer Reporting Casts Identity Theft Victims Out Of Financial Society And How The Law Can Be Harmonized To Bring Them Back In, Ryan Bolger Dec 2020

Door Shut And Ears Plugged: How Consumer Reporting Casts Identity Theft Victims Out Of Financial Society And How The Law Can Be Harmonized To Bring Them Back In, Ryan Bolger

Brooklyn Journal of Corporate, Financial & Commercial Law

Consumer Reporting Agencies (CRAs) are the gatekeepers to the American economy. As the chief informants for prospective lenders, landlords, and employers, they exert immense power over the day-to-day decisions of who gets what. Despite these high stakes, the CRAs run consumer reporting as an automated electronic process that causes a lot of reporting errors, disqualifying consumers from essential goods, services, and opportunities. This is painfully true in the context of identity theft, where perverse incentives pollute the integrity of consumer reporting, piling undue harm onto identity theft victims. The law provides a remedy for this problem, but circuit courts are …

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Consumers' Declining Power In The Fintech Auto Loan Market, Pamela Foohey Dec 2020

Consumers' Declining Power In The Fintech Auto Loan Market, Pamela Foohey

Brooklyn Journal of Corporate, Financial & Commercial Law

Automobiles have become part of America’s infrastructure. For most people, having access to a car is crucial to their livelihoods and they will take on significant amounts of debt to purchase vehicles. Auto debt is unlike any other consumer debt, both in its structure, which allows creditors to easily seize collateral, and in its lack of regulation. The unique and lucrative nature of auto debt has not gone unnoticed by lenders or by companies leveraging fintech to offer people new ways to purchase cars and car loans. This Article assesses the evolving marketplace for auto sales, leasing, and loans to …

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Symposium: Consumer Welfare Market Structure And Political Power, Edward J. Janger Dec 2020

Symposium: Consumer Welfare Market Structure And Political Power, Edward J. Janger

Brooklyn Journal of Corporate, Financial & Commercial Law

Two competing visions dominate the fields of antitrust and consumer protection: neo-liberal and progressive. The neo-classical approach is associated with Robert Bork and the Law and Economics Movement. The progressive strand is older, identified with Brandeis and early 20th Century social reform. As a matter of chronology the Brandeisian view dominated into the 1970s, but from 1980, until recently, the Borkian law and economics approach has been in ascendancy in Congress, the academy, and in the courts. Technological change and events in the broader economy have caused the politics and the academic focus to shift. The financial crisis of 2008-09 …

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Revising The Debt Limit For “Small Business Debtors”: The Legislative Half-Measure Of The Small Business Reorganization Act, Michael C. Blackmon Jun 2020

Revising The Debt Limit For “Small Business Debtors”: The Legislative Half-Measure Of The Small Business Reorganization Act, Michael C. Blackmon

Brooklyn Journal of Corporate, Financial & Commercial Law

Bankruptcy law changed drastically in 2019 with the passage of several bills. This Note will examine two of them. First, the Family Farmer Relief Act of 2019 raised the debt limit of the family farmer from $4,411,400 to $10,000,000. This enables more financially distressed family farmers to be eligible for Chapter 12 relief, a reorganizational tool designed for farmers. Second, the Small Business Reorganization Act of 2019 created Subchapter V – Small Business Debtor Reorganization in Chapter 11. This new Subchapter streamlined the reorganization process for small business debtors by removing roadblocks which often derail a reorganization of a small …

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“Fair Enough”? Revising The Yellowstone Injunction To Fit New York’S Commercial Leasing Landscape And Promote Judicial Economy, Gabriel W. Block Dec 2019

“Fair Enough”? Revising The Yellowstone Injunction To Fit New York’S Commercial Leasing Landscape And Promote Judicial Economy, Gabriel W. Block

Brooklyn Journal of Corporate, Financial & Commercial Law

The Yellowstone injunction is an equitable remedy that tolls any applicable cure period and gives tenants a better opportunity to maintain their leasehold when they have defaulted under their lease. The remedy is available to commercial tenants in New York City and to commercial and residential tenants throughout the State. This Note examines the Yellowstone injunction in the context of New York City’s commercial tenants, who employ it most frequently and benefit most from its protections. This Note examines the development and application of the Yellowstone injunction and proposes changing the doctrine to exclude cases of monetary defaults and expired …

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Between Scylla And Charybdis: Maritime Liens And The Bankruptcy Code, Ian T. Kitts Dec 2019

Between Scylla And Charybdis: Maritime Liens And The Bankruptcy Code, Ian T. Kitts

Brooklyn Journal of Corporate, Financial & Commercial Law

Federal courts have had trouble fitting maritime law into the bankruptcy scheme created by the Bankruptcy Code (the Code). Particularly troublesome have been vessel-arrest proceedings that are underway when the vessel’s owner files for bankruptcy. Prior to the enactment of the Code, courts applied the doctrine of custodia legis to decide whether the admiralty or the bankruptcy court would administer the vessel. Since the Code was enacted, courts have generally held that the bankruptcy court gained control. A recent Ninth Circuit decision, however, split with other circuits and seems to have revived custodia legis. This Note argues that the Ninth …

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Backstop, Not Bailout: The Case For Preserving The Orderly Liquidation Authority Under Dodd-Frank, Mark R. Maciuch Oct 2018

Backstop, Not Bailout: The Case For Preserving The Orderly Liquidation Authority Under Dodd-Frank, Mark R. Maciuch

Brooklyn Journal of Corporate, Financial & Commercial Law

The Trump Administration and Republicans have initiated efforts to repeal certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), one of which is the Orderly Liquidation Authority (OLA) under Title II of Dodd-Frank. Critics of the OLA argue that it enables, rather than prevents, future bailouts funded by taxpayers. These critics are concerned with the Federal Deposit Insurance Corporation’s (FDIC) discretion to decide when and how to resolve distressed financial firms, as well as the FDIC’s access to large amounts of funds from the U.S. Department of the Treasury to carry out these functions. Proponents of …

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The Market For Corporate Control In The Zone Of Insolvency: Symposium Introduction, Edward J. Janger Oct 2018

The Market For Corporate Control In The Zone Of Insolvency: Symposium Introduction, Edward J. Janger

Brooklyn Journal of Corporate, Financial & Commercial Law

No abstract provided.

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Corporate Distress, Credit Default Swaps, And Defaults: Information And Traditional, Contingent, And Empty Creditors, Henry T. C. Hu Oct 2018

Corporate Distress, Credit Default Swaps, And Defaults: Information And Traditional, Contingent, And Empty Creditors, Henry T. C. Hu

Brooklyn Journal of Corporate, Financial & Commercial Law

Federal securities law seeks to ensure the quality and quantity of information that corporations make publicly available. Informational asymmetries associated with companies in financial distress, but not in bankruptcy, have received little attention. This Article explores some important asymmetries in this context that are curious in their origin, nature, and impact. The asymmetries are especially curious because of the impact of a world with credit default swaps (CDS) and CDS-driven debt “decoupling.” The Article explores two categories of asymmetries. The first relates to information on the company itself. Here, the Article suggests there is fresh evidence for the belief that …

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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

Brooklyn Journal of Corporate, Financial & Commercial Law

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 …

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Transparency In Corporate Groups, Jay Lawrence Westbrook Oct 2018

Transparency In Corporate Groups, Jay Lawrence Westbrook

Brooklyn Journal of Corporate, Financial & Commercial Law

This Article addresses a remarkable blind spot in American law: the failure to apply the well-established principles of secured credit to prevent inefficiency, confusion, and fraud in the manipulation of the webs of subsidiaries within corporate groups. In particular, “asset partitioning” has been a fashionable subject in which the central problem of non-transparency has been often mentioned but little addressed. This Article offers a concept for a new system of corporate disclosure for the benefit of creditors and other stakeholders. It would require disclosure of corporate structures and allocations of assets among affiliates to the extent the affiliates are to …

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Badges Of Opportunism: Principles For Policing Restructuring Support Agreements, Edward J. Janger, Adam J. Levitin Oct 2018

Badges Of Opportunism: Principles For Policing Restructuring Support Agreements, Edward J. Janger, Adam J. Levitin

Brooklyn Journal of Corporate, Financial & Commercial Law

Bankruptcy is a market for corporate control. Current bankruptcy practice offers two alternative mechanisms for effectuating changes in control of a firm: (1) a pre-plan all-asset sale under section 363(b) of the Bankruptcy Code; or (2) an asset sale or recapitalization pursuant to a plan of reorganization under section 1129 of the Code. Pre-plan sales under section 363(b) are fast, but lack the procedural protections associated with a restructuring or sale pursuant to a plan. Plan confirmation can be costly and uncertain, however. Restructuring support agreements (“RSAs”)—contractual agreements to support a future restructuring that has certain agreed-upon characteristics—appear to offer …

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Insider Trading: Are Insolvent Firms Different?, Andrew Verstein Oct 2018

Insider Trading: Are Insolvent Firms Different?, Andrew Verstein

Brooklyn Journal of Corporate, Financial & Commercial Law

Federal law restricts insider trading. Yet these restrictions operate differently on insolvent or bankrupt firms. The law is more constraining in some respects: federal law extensively regulates the trading of residual claims in solvent firms but not insolvent firms. However, the law is more constraining in other respects: insider trading law does little to limit debt-trading at solvent firms, but a bankruptcy enmeshes all creditors in a web of insider trading rules. This Article identifies insolvency’s economic and legal influence on insider trading law and then normatively evaluates this transformation.

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Corporate Governance And Bankruptcy, Daniel J.H. Greenwood Oct 2018

Corporate Governance And Bankruptcy, Daniel J.H. Greenwood

Brooklyn Journal of Corporate, Financial & Commercial Law

Ordinary corporate law invests enormous authority in corporate leaders, largely without accountability either to those they govern or to the judiciary, in defiance of much of what we know about effective governance procedure. Instead, we rely on the markets in which the corporation participates as the primary check on incumbent officials. Regardless of whether relying on markets is sufficient in the ordinary course, corporate insolvency is the markets’ verdict that incumbent management has failed. Accordingly, in bankruptcy and insolvency more generally, the law ought to abandon its ordinary deference to the corporate powers that be and instead impose standard good …

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