Bankruptcy Law Commons^™

The Bankruptcy Abuse Prevention And Consumer Protection Act: An Empirical Examination Of The Act's Business Bankruptcy Effects, Foteini Teloni

SJD Dissertations

This paper uses a multivariate logistic regression model to examine empirically and quantify for the first time the effect of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) on the Chapter 11 landscape. Two samples are tested: a general sample consisting of firms from various corporate sectors, and a sample consisting only of retailers. Both studies show that the 2005 amendments had a statistically significant effect on traditional Chapter 11 practice. In particular, post-BAPCPA we observe a rise in rapid dispositions through the form of a sale of all or substantially all debtor assets. Indeed, in the post-amendments era, …

Chapter 11 Duration, Preplanned Cases, And Refiling Rates: An Empirical Analysis In The Post-Bapcpa Era, Foteini Teloni

SJD Dissertations

This article empirically examines and quantifies the effect of the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) on three distinct aspects of the Chapter 11 process: a) the duration of traditional Chapter 11 cases; b) the use of prepackaged and prenegotiated bankruptcies; and c) debtor refiling rates. The sample studied consists of companies with more than $100 million in assets that both filed for and exited Chapter 11 between 1997 and 2014. BAPCPA is found to be associated with shorter Chapter 11 case duration, and an increased use of prepackaged and prenegotiated bankruptcies. Additionally, BAPCPA is found to be …

Preserving Value In The Post-Bapcpa Era — An Empirical Study, Foteini Teloni

SJD Dissertations

Through the use of a multivariate regression model, this article studies the effect on debtor reorganization values of the shortened reorganization timeframe imposed by the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”). The study shows that BAPCPA is positively correlated at a statistically significant level with higher reorganization recoveries. This result is attributed to the increased proportion of prepackaged and prenegotiated bankruptcies observed in the post-2005 era, as these “fast-track” bankruptcy cases entail lower costs and better preserve the firm’s value.

Two Cheers For Universalism: Nortel's Nifty Novelty, John A. E. Pottow

Book Chapters

Individuals in the cross-border bankruptcy community hiding under rocks may not have heard about the monumental decisions in the co-trials in the Canadian-United States Nortel bankruptcy proceedings, In re Nortel Networks, Inc and Re Nortel Networks Corp. The decisions are thoughtful, innovative, practical, and important. They warrant a detailed case comment or two in their own right. This brief article, however, will not provide such worthy treatment. Those hungering for in-depth reports of the cases and their holdings may stop reading now and devote their labours elsewhere. What this article will be is an appreciation of Nortel, explaining …

Beyond Carve-Outs And Toward Reliance: A Normative Framework For Cross-Border Insolvency Choice Of Law, John A. E. Pottow

Law & Economics Working Papers

Choice of law in cross-border insolvency is gaining increased attention, not just by lowly academics but by policymakers who actually matter. I argue it is time to bring some normative guidance to the burgeoning reform efforts. At the highest level of theoretical purity, universalism seems to have (rightly) captured the biggest following. But it has been scaled back by what I call “second-order” considerations of pragmatics to its lesser, modified form. I take that retrenchment as necessary and note how it has been deployed through a carveout-based regime of subject-specific exceptions from lex fori concursus. Given that lay of the …

Time For An Update: A New Framework For Evaluating Chapter 9 Bankruptcies, Michael J. Deitch

Fordham Law Review

    Municipal bankruptcies have been making national news since the “Great Recession.” Municipalities like Stockton, Vallejo, and Jefferson County gained notoriety for the record scale of their bankruptcy filings, only to be surpassed by Detroit shortly thereafter as the largest and most populous municipal bankruptcy filing. Historically, municipal bankruptcy occurred infrequently, leaving the nuances of many critical issues, including insolvency, asset utilization, and good faith, unexplored in case law. For example, how should a bankruptcy court analyze Detroit’s cityowned art museum that houses billions of dollars of art when bondholders, pensioners, and other unsecured creditors have unpaid claims? And how should …

Foreign Debt - Act Of State Doctrine - Unilateral Deferral Of Obligations By Debtor Nations Is Inconsistent With United States Law And Policy: Allied Bank International V. Banco Credito Agricola De Cartago, Marc J. Lewyn

Georgia Journal of International & Comparative Law

No abstract provided.

Tools Of Ignorance: An Appraisal Of Deficiency Judgments, Alan M. Weinberger

Washington and Lee Law Review

While achieving success as a major league catcher, Mike Matheny was preparing for a post-baseball career in real estate development. He could not have picked a worse time to pursue his aspiration. Matheny lost his accumulated savings and his family’s home after being held personally liable for a $4.2 million deficiency judgment following foreclosure of property he was unable to develop or market during the Great Recession. Matheny’s failure to succeed in real estate was the proximate cause of his return to baseball as manager of the St. Louis Cardinals.

Matheny’s story provides the backdrop for examining the methods by …

Municipal Bonds In Bankruptcy § 902(2) And The Proper Scope Of “Special Revenues” In Chapter 9, Alexander D. Flachsbart

Washington and Lee Law Review

No abstract provided.

Sovereign Defaults Before International Courts And Tribunals, John A. E. Pottow, Emily Himes Iversen

Law & Economics Working Papers

This book review probes Michael Waibel’s new book, Sovereign Defaults Before International Courts and Tribunals. Waibel's project is ambitious, exploring international attempts to address sovereign defaults over the past century and a half. Through painstaking and comprehensive historical analysis, Waibel shows how we've been here before -- a sober reminder for those thinking Argentina is simply part of a new fad in financial default. With the UN now turning its attention to sovereign debt issues, this study is especially timely. Although somewhat disappointing in the lightness of its normative content, the book should nevertheless prove helpful to those considering the …

Restructuring A Sovereign Bond Pari Passu Work-Around: Can Holdout Creditors Ever Have Equal Treatment?, Natalie A. Turchi

Fordham Law Review

    The rise of vulture fund investing in sovereign bonds has created additional hurdles to successful restructuring in an already fragile ad hoc process. Recent litigation in NML Capital, Ltd. v. Argentina has proven courts’ willingness to utilize powers of equity to enforce a ratable payment interpretation of the pari passu clause—the equal treatment provision commonly found in sovereign bond contracts—creating much uncertainty on how the ruling will affect future restructuring efforts. By looking to the tension in interpretations of the pari passu clause, discrepancies in remedial relief awarded, and international institutions’ proposed solutions, this Note analyzes the role of the …

The Geography Of Bankruptcy, Laura N. Coordes

Vanderbilt Law Review

Companies routinely file bankruptcy cases in venues that have no meaningful connection to the company, its operations, or its stakeholders. This practice (1) divorces bankruptcy and venue from their ties to location; (2) disrupts the fundamental balance underlying the Bankruptcy Code by shifting the focus exclusively to the needs of sophisticated parties; and (3) shuts out parties who have a right to participate in bankruptcy proceedings, which contravenes due process and raises fairness concerns. To solve these problems, this Article proposes new procedures that mandate a thorough discussion of venue considerations in bankruptcy cases. By requiring parties to justify their …

Bank Of America, N. A. V. Caulkett, Et Al.: Brief Of Bankruptcy Law Professors Robert M. Lawless, Bruce A. Markell, And John A. E. Pottow As Amici Curiae In Support Of Affirmance, John A. E. Pottow

Appellate Briefs

Amici curiae are three leading scholars of bankruptcy, commercial, and business law who have been teaching, researching, and writing about bankruptcy law for decades. They seek to provide the Court with a fuller description of the legal rules, history, and policies affected by this case.

Brief Of Professor Margaret Howard As Amicus Curiae In Support Of Respondents: Bank Of America, N.A. V. Caulkett, Margaret Howard

Scholarly Articles

None available.

May A Bankruptcy Court Award Fees To Debtor's Counsel For Its Work Defending Its Fee Application: Baker Botts V. Asarco (14-103) [Notes], Marshall E. Tracht

Other Publications

The Bankruptcy Code authorizes the retention of lawyers and other professionals to provide necessary services to the trustee or debtor in possession. The lawyers and other professionals must submit fee applications itemizing their work for approval by the bankruptcy court, and those applications can be challenged by creditors and other parties in interest. This case asks whether a bankruptcy court has the authority to award fees to a law firm to cover its work in defending against challenges brought to its fee applications.

Betting On The Upside: Why Affirming River Road Favors Distressed Debt Speculators Over The Rehabilitation Of Businesses, Julia L. Onorato

Northwestern University Law Review

The Chapter 11 bankruptcy process demands a careful balance between protecting the creditors’ rights to be repaid and allowing a failing entity the ability to restructure. The Supreme Court in RadLAX Gateway Hotel affirmed the Seventh Circuit’s holding in River Road and interpreted the Bankruptcy Code in a way that improperly shifts this balance towards the most senior creditors at the expense of business. This Note will analyze the circuit disagreement over the cramdown provision in the Bankruptcy Code and the Supreme Court’s ultimate resolution. It will argue that in light of recent trends in the credit markets - including …

Saving Homes? Bankruptcies And Loan Modifications In The Foreclosure Crisis, Alan M. White, Carolina Reid

Florida Law Review

Do homeowner bankruptcy filings work to delay or prevent home foreclosures, and how do they compare to voluntary loan modifications specifically targeted to mortgage relief? The 2007–2012 financial crisis provides a unique opportunity to assess whether bankruptcy can help homeowners avoid the negative consequences of over-indebtedness and mortgage default. This empirical study analyzes a large, loan-level mortgage dataset to determine which variables are associated with delinquency and bankruptcy filing, and in turn, whether filing bankruptcy or receiving a loan modification measurably influences subsequent loan outcomes (e.g., foreclosure sale, prepayment, or default cure). Overall, we find that bankruptcy filings delay foreclosures …

Choosing The "Per-Debtor" Approach To Plan Confirmation In Multi-Debtor Chapter 11 Proceedings, Suzanne T. Brindise

Northwestern University Law Review

No abstract provided.

Feeling Insecure—A State View Of Whether Investors In Municipal General Obligation Bonds Have A Mere Promise To Pay Or A Binding Obligation, Randle B. Pollard

Scholarly Articles

The City of Detroit's filing for municipal bankruptcy in July, 2013, has added to a continuing controversy of whether general obligation bondholders have a secured lien. The City of Detroit claimed its general obligation bondholders did not have a fully secured lien because the law of the state of Michigan did not create a statutory lien. Without the creation of a lien by state law, during the insolvency or bankruptcy of municipalities, general obligation bondholders will potentially have a mere promise to pay versus a binding obligation to pay, and therefore, will not have a secured lien. Treating otherwise secured …

In Re Tellico Landing, Llc, Richard E. Graves, Lee T. Nutini

Chapter 11 Bankruptcy Case Studies

No abstract provided.

The Enforceability Of Abatement Provisions, Shantel Castro

Bankruptcy Research Library

(Excerpt)

The moment a lease is executed, a set of obligations and rights are created between the landlord and tenant. In exchange for the payment of rent, the landlord is required to provide a space suited for the intended purpose of the rental. In addition, both parties are obligated to abide by any specific terms in the lease. Among those terms may be an abatement provision. An abatement provision is a clause in the lease that releases a lessee from the obligation to pay rent when a particular event occurs. The specific triggering event is usually listed in the lease. …

The Permissibility Of Chapter 11 Non-Debtor Release Provisions, Ashraf Mokbel

Bankruptcy Research Library

(Excerpt)

Generally speaking, bankruptcy proceedings do not impact non-debtor third parties liabilities. However, bankruptcy courts are courts of equity. This raises the issue of what provisions may be included in a confirmable plan. Specifically, there is the issue of whether a bankruptcy court can confirm a plan if it contains a non-debtor release provision which impacts non-debtor third party liabilities.

A non-debtor release provision shields third parties who share an identity of interest with the debtor, usually corporate officers and directors in a Chapter 11 proceeding, from any claim, obligation, cause of action, or liability to any party in interest …

Bankruptcy And Higher Education Institutions, St. John’S University School Of Law Symposium, Scott F. Norberg

Faculty Publications

No abstract provided.

The Logic And Limits Of Liens, Edward J. Janger

Faculty Scholarship

No abstract provided.

Despite A Very High Income, Chapter 7 Debtor’S May Succeed, Pamela Frederick

Bankruptcy Research Library

(Excerpt)

Section 707 of the Bankruptcy Code governs when a court may dismiss a chapter 7 bankruptcy case. Under section 707(a), a court may dismiss a chapter 7 case “for cause.” In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) and amended section 707(b) to include the so-called “means test,” which provides a formula for determining whether “cause” exists to dismiss (or convert with the debtor’s consent) the debtor’s case. Courts split as to whether this amendment to section 707(b) permits a court to consider the debtor’s income when deciding whether to dismiss the debtor’s chapter …

Whether Rejection Of A Trademark License Agreement Terminates The Licensee's Rights To Use The Trademark, Crystal Lawson

Bankruptcy Research Library

(Excerpt)

Section 365(a) of the Bankruptcy Code sets forth the basic power of a trustee in bankruptcy or a debtor in possession to assume or reject an executory contract. A debtor's ability to assume or reject an executory contract allows a debtor to keep favorable contracts and to discard burdensome contracts, subject to the bankruptcy court’s approval. The bankruptcy court will apply a two-part test to determine whether assumption or rejection should be allowed. First the court will determine whether the contract is executory. If the court determines that the contract is executory, the court will then determine whether assumption …

Determining The Meaning Of “Instrumentality” In The Bankruptcy Code, Nicholas Panzarella

Bankruptcy Research Library

(Excerpt)

The Bankruptcy Code dictates who is eligible to be a debtor in bankruptcy. Section 109(a) generally provides that “a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be a debtor under [the Bankruptcy Code].” Although a debtor that is a “person” or a “municipality” maybe eligible to file for bankruptcy, section 109 restricts which chapters that a debtor may file under. In particular, subject to various restrictions, a “person” may be a debtor under chapter 7, 11, 12, or 13. A municipality, however, is only eligible …

The Applicability Of The Eleventh Amendment In Chapter 9 Cases, Christopher J. Pedraita

Bankruptcy Research Library

(Excerpt)

The sovereign immunity of the states, or the freedom of a state from suit by its citizens, became constitutionally protected in the late eighteenth century through the passage and ratification of the Eleventh Amendment. In particular, the Eleventh Amendment protected states from suits “commenced or prosecuted…by Citizens of another State, or by Citizens or Subjects of any Foreign State.” Notwithstanding the plain language, the Supreme Court has held that the Eleventh Amendment also bars suits against a state that are commenced by citizens of its own state. Moreover, the Eleventh Amendment also bars suits by municipalities brought against the …

Defining Residency Under The Federal Homestead Exemption, Sally Profeta

Bankruptcy Research Library

(Excerpt)

The homestead exemption is a longstanding doctrine in American jurisprudence that protects the interest debtors have in their dwelling when filing for bankruptcy. Section 522(d)(1) of the Bankruptcy Code’s federal exemption scheme provides debtors with the opportunity to preserve the interest they have in their residence, with outside limits on the amount that interest is valued. However, courts are divided on the interpretation of the word “residence,” and have struggled to determine whether “residence” requires actual occupancy of the claimed property at the date of filing.

There are two cannons of statutory interpretation that are used in this context, …

Legitimizing Bankruptcy Petition Preparers: A Sociolegal Prescription For Change, 89 American Bankruptcy Law Journal 269 (2015) (Peer-Reviewed Journal), Michael D. Sousa

Sturm College of Law: Faculty Scholarship

Individuals who need to file for bankruptcy often find themselves confronted with the very real dilemma of desperately needing financial relief on the one hand and affording the high costs of accessing the bankruptcy law system on the other. The decision to resort to bankruptcy comes at a financially precarious time in most peoples’ lives and often after an exogenous life event pushes them over the financial precipice. Given that many consumer debtors come from the lower middle class and working class, many have a difficult time finding the funds to pay for the necessary access costs, most notably, attorney …