Bankruptcy Law Commons^™

The Value Of Soft Variables In Corporate Reorganizations, Michelle M. Harner

Faculty Scholarship

When a company is worth more as a going concern than on a liquidation basis, what creates that additional value? Is it the people, management decisions, the simple synergies of the operating business, or some combination of these types of soft variables? And perhaps more importantly, who owns or has an interest in these soft variables? This article explores these questions under existing legal doctrine and practice norms. Specifically, it discusses the characterization of soft variables under applicable law and in financing documents, and it surveys related judicial decisions. It also considers the overarching public policy and Constitutional implications of …

Consent: Its Scope, Blips, Blemishes, And A Bekins Extrapolation Too Far (Keynote Address), Hon. Thomas B. Bennett

Campbell Law Review

No abstract provided.

Positive Liberty In Public Finance: State Oversight Of Local-Government Debt And The North Carolina Model, Adam C. Parker

Campbell Law Review

No abstract provided.

A Traditionalist's Take On Bankruptcy Intersections, Stephanie Ben-Ishai

Articles & Book Chapters

No abstract provided.

When Faith Falls Short: Bankruptcy Decisions Of Churches, Pamela Foohey

Scholarly Works

What does a church do when it is about to go bust? Religious organizations, like any business, can experience financial distress. Leaders could try to solve their churches’ financial problems on their own. Perhaps leaders do not view the problems as addressable with law. Or perhaps they do not think, as a moral or spiritual matter, that they should resort to the legal system, such as bankruptcy, to deal with their churches’ inability to pay its debts. Yet about ninety religious organizations seek to reorganize under the Bankruptcy Code every year. This Article relies on interviews with forty-five of these …

The Least “Constructive” Provisions?: Analyzing The Bankruptcy Code’S Codified Canons, Asher Hawkins

NYLS Law Review

No abstract provided.

What Are The Article Iii Limits To Bankruptcy Court Jurisdiction, And Can Parties Consent To Expanded Jurisdiction: Wellness International Network V. Sharif (13-935), Marshall E. Tracht

Articles & Chapters

No abstract provided.

Bankruptcy And Education, Keith Sharfman

Faculty Publications

(Excerpt)

Bankruptcy law interacts with education law in a number of respects. A bankrupt educational institution loses access to student financial aid, and its accreditation status is excluded from the bankruptcy estate. Actions by accreditation agencies against bankrupt educational institutions are not subject to the automatic stay. And absent a showing of undue hardship, student loans are not dischargeable in bankruptcy.

The exceptional treatment of educational institutions and their students in bankruptcy reflects a fundamental tension between the goals of bankruptcy law on the one hand and education policy on the other. While bankruptcy law generally seeks to maximize value …

Opening Remarks, Robert Schapiro

Emory Bankruptcy Developments Journal

Dean Robert Schapiro's remarks honoring Marjorie Girth at the annual Emory Bankruptcy Developments Journal Banquet. Dean Schapiro highlighted Emory's bankruptcy program, the Twelfth Annual Emory Bankruptcy Developments Journal Symposium held in February, and Marjorie Girth's leadership and achievements in bankruptcy law.

Consumer Bankruptcy Panel: Undue Hardship: An Analysis Of Student Loan Debt Discharge In Bankruptcy, C. Ray Mullins, Dalié Jiménez, Rafael Pardo, Elaine Poon

Emory Bankruptcy Developments Journal

The Consumer Panel focused on student loan debt, featuring judicial, academic, and practical insights and a call to action to help consumers.

Labor Activism In Bankruptcy, Andrew B. Dawson

Articles

This article analyzes the role of labor unions in corporate reorganizations and argues that labor union participation can improve corporate governance in the bankruptcy context. Generally, when a unionized corporation seeks to reorganize in bankruptcy, it does so with an eye towards obtaining concessions from its labor unions. The Bankruptcy Code permits corporate debtors to reject their collective bargaining agreements and to impose reduced wages and benefits, thus placing labor unions in a position of bargaining over concessions in bankruptcy. Such concession bargaining is vitally important to the labor union and to the debtor's reorganization efforts; however, the focus on …

Recognition And Enforcement In Cross-Border Insolvency Law: A Proposal For Judicial Gap-Filling, Professor Sandeep Gopalan, Michael Guihot

Vanderbilt Journal of Transnational Law

The globalization of business activity necessarily entails contacts with a diverse array of national laws and legal systems, and insolvencies in this context often have transnational consequences. In such situations, there is a clash of competing national laws on weighty questions including the recognition of security interests, processes related to the disbursal of assets, and different policy preferences underlying the protection of different kinds of creditors. These clashes pose difficulties because each country has framed its insolvency laws in response to particular political exigencies and the policy preferences of its citizens, reflecting different bargains between creditor and debtor protection. Despite …

Implementing Symmetric Treatment Of Financial Contracts In Bankruptcy And Bank Resolution, E. J. Janger, John A.E. Pottow

Articles

Financial contracts come in many forms and serve many functions in both the financial system and the broader economy. Repos secured by U.S. Treasury securities act as money substitutes and can play an important role as part of the money supply, while similarly structured repos, secured by more volatile collateral, may be used as speculative devices or hedges. Swaps can be used to insure against various types of market risk, from interest rates to oil prices, or they can operate as vehicles for highly leveraged investments. The parties to these instruments are sometimes major financial institutions and, other times, ordinary …

Liquidity, Systemic Risk, And The Bankruptcy Treatment Of Financial Contracts, Rizwaan J. Mokal

Brooklyn Journal of Corporate, Financial & Commercial Law

No abstract provided.

Leverage, Default, And Mortality: Evidence From Cancer Diagnoses, Arpit Gupta, Edward R. Morrison, Catherine Fedorenko, Scott Ramsey

Faculty Scholarship

This paper tests whether housing wealth mitigates the effects of health shocks on financial stress and mortality. We link cancer records to mortgage, bankruptcy, foreclosure, and credit report data. We find that cancer diagnoses are financially destabilizing even for households with health insurance, but the effect is driven by households without home equity. Households with equity extract it (by refinancing a mortgage or taking out a second). They are also more likely to accept recommended therapies and have higher post-diagnosis survival rates. Our findings show that housing wealth plays an important role in understanding how individuals buffer idiosyncratic shocks.

Secured Credit In Religious Institutions' Reorganizations, Pamela Foohey

Scholarly Works

Scholars increasingly assume that most businesses enter Chapter 11 with a high percentage of secured debt, which leads to a high percentage of cases ending in the sale of the debtor’s assets under section 363 of the Bankruptcy Code rather than with confirmation of a reorganization plan. However, evidence and discussions about “the end of bankruptcy” center on secured creditors’ role in the reorganizations of very large corporations. The few analyses of cross-sections of Chapter 11 proceedings suggest that secured creditor control is not nearly as omnipresent as asserted and that 363 sales are not as dominant as assumed.

This …

Grassroots Shareholder Activism In Large Commercial Bankruptcies, Diane Lourdes Dick

Faculty Articles

In early 2013, a group of similarly situated individuals gathered to discuss how they could defend themselves against a grave potential injustice. Time was of the essence, so they would need to act quickly to preserve their rights. Fortunately, their path to justice was already paved: the matter was pending in federal court, and each had standing to appear and be heard. But frustratingly, this seemingly well-paved path was barred to them. These individuals, who were technically parties to the proceeding, were virtually invisible to the court and largely disenfranchised in settlement negotiations. Striving to overcome these obstacles, they persisted …

The Uncertain Future Of The Unfinished Business Doctrine, Dan Teplin

Bankruptcy Research Library

(Exceprt)

It is no secret that the legal industry has experience financial difficulty following the great recession. Many law firms have been less profitable, and in some extreme circumstances, have filed for bankruptcy. The worlds largest law firms are of no exception to this recent phenomenon. The collapses of the mega-firms Dewey & LeBoeuf, Coudert Brothers LLP, Heller Ehrman LLP, Howrey LLP, Thacher Proffitt & Wood LLP, and Thelen LLP are prime examples.

Since most law firms, especially large firms, do not reorganize in bankruptcy, a bankruptcy trustee will often be appointed to administer the firm’s estate. In order to …

The Nature Of A Parent-Subsidiary Relationship Determines How To Allocate A Refund In A Tax Sharing Agreement, Samuel Cushner

Bankruptcy Research Library

(Excerpt)

Often, a parent corporation and its subsidiaries will file a consolidated tax return because it comes with many benefits, such as being able to offset gains and losses and deferring tax consequences for sales between consolidated groups. The parent corporation and the subsidiaries will often enter into a tax sharing agreement, which will determine each entity’s respective tax liability. In the event that a refund is issued, the tax sharing agreement will usually dictate how to allocate the refund amongst the parent and the subsidiaries.

A tax sharing agreement is “an agreement among members of an affiliated group of …

Second Circuit Sets A Low Bar For Foreign Debtors Seeking Chapter 15 Relief, Samantha Ruppenthal

Bankruptcy Research Library

(Excerpt)

Continued globalization of trade and investment led Congress, through the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), to amend the Bankruptcy Code (“the Code”) in 2005 to include chapter 15. Chapter 15 adopted UNCITRAL’s Model Law on Cross-Border Insolvency —both aim to guide parties through cross-border insolvency proceedings. In addition to the policy objectives for all bankruptcies, chapter 15 specifically aspires to foster cooperation between the United States and foreign countries involved in cross-border insolvency cases and promote greater legal certainty in global trade and investment. A chapter 15 case is generally meant to supplement the plenary case …

Equitable Subordination- Where Is Applies, What It Does, And The Implications That Result, Lauren Casparie

Bankruptcy Research Library

(Excerpt)

Equitable subordination, as permitted under section 510(c)(1) of the Bankruptcy Code, provides the court the ability to reorganize creditor’s debt in the light of any inequitable conduct. The code gives courts the ability to subordinate the level of priority of a creditor’s claim in light of any inequitable conduct committed by that creditor. This remedy is applied in cases where the creditor has acted in an inequitable manner, causing injury or creating unjust positions for other creditors. This remedy is remedial, not punitive, and limited only to the extent necessary to remedy the damage caused by the wrongdoing creditor. …

Whether Undistributed Chapter 13 Payment Plan Funds Held By A Chapter 13 Trustee Should Be Distributed To The Debtor Or The Debtor’S Creditors After Conversion From Chapter 13 To Chapter 7, Rosa Aliberti

Bankruptcy Research Library

(Excerpt)

Qualified individuals seeking to reorganize their debts may file under Chapter 13 of the Bankruptcy Code. Under chapter 13, a debtor makes payments according to a court approved payment plan, which is administered by a chapter 13 trustee, and remains in possession of all the property of the estate. Once a debtor makes all his payments under the chapter 13 payment plan, he has a right to seek a discharge, provided that he meets certain requirements. These requirements include that the debtor: (1) certifying that he paid all domestic support obligations prior to the certification being made; (2) received …

Chapter 11 Liquidations And The Termination Of Collective Bargaining Agreements, Cecilia Ehresman

Bankruptcy Research Library

(Excerpt)

Section 1113 of the Bankruptcy Code governs the modification or rejection of a collective bargaining agreement (“CBA”) by a chapter 11 trustee or debtor-in-possession. To modify or reject a CBA, a trustee or debtor-in-possession must (1) make a proposal to the union which provides the “necessary modifications in the employees benefits and protections that are necessary to permit the reorganization of the debtor”; (2) provide the union with relevant information as is necessary to evaluate the proposal; and (3) meet with the union and confer in good faith. For the modification or rejection to take place, the union must …

Self-Employed Debtors Face A Hard Truth When Calculating Their Current Monthly Income For The Applicable Commitment Periods Under Chapter 13 Plans, Arthur Rushforth

Bankruptcy Research Library

(Excerpt)

A bankruptcy court may confirm a debtor’s chapter 13 plan of reorganization if the requirements of section 1325(a) of the Bankruptcy Code are satisfied. If the chapter 13 trustee or an unsecured creditor objects to the confirmation of the plan, however, the bankruptcy court may only confirm the plan if it either provides for the repayment in full of claims or that the debtor must devote all of his projected disposable income towards payments of his unsecured creditors during the plan’s “applicable commitment period.” The debtor’s applicable commitment period is five years if the debtor’s current monthly income exceeds …

Rule 9011 Of The Federal Rule Of Bankruptcy Procedure, Nancy Bello

Bankruptcy Research Library

(Excerpt)

Rule 9011(b) of the Federal Rules of Bankruptcy Procedure, the bankruptcy counterpart to Rule 11 of the Federal Rules of Civil Procedure (“Rule 11”), provides, that in presenting a pleading to the court, an attorney or unrepresented party is certifying that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, that: (1) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation; (2) the claims, defenses, and other legal contentions therein are warranted by …

The Earmarking Doctrine: Can It Be Used To Protect Late-Recorded Mortgages In Preference Action?, Michael Benzaki

Bankruptcy Research Library

(Excerpt)

Borrowers often seek to refinance their home loan mortgages in order to attain more favorable interest rates and other terms. Essentially, in these refinancing transactions, “the parties are looking simply to exchange one more expensive secured loan for another less expensive secured loan.” Typically, as part of the transaction, a refinancing lender will discharge the original mortgage and record a new mortgage. It is not uncommon for a delay to occur such that the new mortgage is recorded over thirty days after the lender transferred the funds to pay off the original loan. In such a case, if the …

Does The Fdcpa Apply In Bankruptcy?, Garam Choe

Bankruptcy Research Library

(Excerpt)

In 1977, Congress enacted the Fair Debt Collection Practices Act (“FDCPA”) to remedy rampant abusive debt collection practices by debt collectors. A year later, the Bankruptcy Code was enacted under Title 11 of the United States Code. Conflicts arise as to whether which law applies when debt collectors use abusive debt collection practices while seeking to recover from a debtor in a bankruptcy case. Circuit courts are split as to whether the Bankruptcy Code displaces the FDCPA in the bankruptcy context. Some circuit courts have concluded that the Bankruptcy Code displaces the FDCPA in the bankruptcy context. Alternatively, some …

Borrowers And Bankruptcy Trustees’ Unsuccessful Attempts To Avoid A Mortgage Under The “Splitting-The-Note” Theory, Alana Friedberg

Bankruptcy Research Library

(Excerpt)

In 1993, the mortgage industry created the electronic database Mortgage Electronic Registration System (“MERS”) in order to “track ownership interests in residential mortgages.” MERS “serves as the mortgagee in the land records for loans registered on the MERS System, and is a nominee (or agent) for the owner of the promissory note.” To date, MERS holds title to around 60 million home mortgages, about half of all home mortgages in the United States.

Borrowers and bankruptcy trustees have attempted unsuccessfully to argue a mortgage or deed of trust is void if a third party, such as MERS, was designated …

Professional Fee Enhancements: Determining Whether A Professional Is Entitled To A Fee Enhancement Under Section 330 Of The Bankruptcy Code, Adrianna R. Grancio

Bankruptcy Research Library

(Excerpt)

The Bankruptcy Code governs the compensation of a professional person employed under section 327 or 1103 of the Bankruptcy Code. Under section 330(a), the court may award a professional “reasonable compensation for actual [and] necessary services.” Section 330 provides a non-exclusive list of factors for a court to consider in determining whether the proposed compensation is reasonable. In addition to these statutory factors, courts also analyze the proposed fee by using two methods utilized in pre-bankruptcy code cases; (1) “Lodestar” method and (2) factors from Johnson v. Georgia Highway Express, Inc (the “Johnson Factors”).

The determination of whether the …

Student Loans Can Be Discharged (At Least Partially) In Bankruptcy After All, Carmella Gubbiotti

Bankruptcy Research Library

(Excerpt)

Section 523 of the Bankruptcy Code sets forth debts that are not dischargeable. Among the non-dischargeable debts, which a debtor will still owe after they receive a bankruptcy discharge, are debts from educational loans. As such, these student loan debts may prevent many debtors from receiving a truly fresh start following bankruptcy. Courts historically have approached the undue hardship exception to this rule narrowly, applying it only where the debtor, under the circumstances, could not reap the benefit of her education.

This Article will discuss the various tests courts use to determine whether an educational debt is dischargeable. Part …