Bankruptcy Law Commons^™

Deemed Acceptance, Not Deemed Consent: Nonvoting Stakeholders And A Uniform Conspicuousness Standard For Opt-Out Third-Party Releases, Zach Cavagnaro

Student Scholarship

After Harrington v. Purdue Pharma, the fight over third-party opt-out releases has shifted from whether consent is necessary to what consent means. The Supreme Court held that the Bankruptcy Code does not authorize non-consensual nondebtor releases outside 11 U.S.C § 524(g), and—critically—left out what exactly counts as consent. The fight over consent is expected to command a lot of litigation, so a simple, uniform conspicuousness standard for nonvoting stakeholders’ opt-out releases can help alleviate litigation costs and focus on the definition of consent. This Comment argues that courts should evaluate consent through a unified, contract-law-grounded conspicuousness standard calibrated to the …

Victor Schwartz: Issues And Reforms In Mass Tort Litigation, Elaine Panagakos

University of Cincinnati Law Review

No abstract provided.

The Bankruptcy Revolving Door, Belisa Pang

Northwestern University Law Review

The American consumer bankruptcy system is a costly regime with profound societal implications. Between 2008 and 2023, consumers filed 13.8 million bankruptcy cases across the ninety-four federal bankruptcy districts in the United States, generating over $4 billion in court filing fees alone. When accounting for attorney fees, trustee expenses, creditor costs, and broader economic externalities—such as increased interest rates borne by other consumers—the total financial impact easily reaches tens of billions, if not hundreds of billions, of dollars.

Against that backdrop, this study uncovers a startling phenomenon: nearly 46% of the consumers who filed bankruptcy in 2023 were repeat filers, …

Texas Two-Stepping With Bad Faith: Dismissing Solvent Corporate Debtor Filings Under Chapter 11, Megan Russelman

St. John's Law Review

(Excerpt)

A majority of corporate bankruptcies occur within the scope of a Chapter 11 reorganization, as the process allows a debtor to retain control over most business operations and act in place of the trustee. Most frequently, a debtor will file for Chapter 11 when they are facing debts they are unable or unwilling to repay when due. However, given the absence of an insolvency requirement in the Bankruptcy Code, some corporations utilize a Chapter 11 bankruptcy filing to handle their debts even if they are not entirely insolvent. Many corporations that have taken advantage of solvent debtor filings have …

Defining The Undefined: Reimagining The “Undue Hardship” Standard In Light Of Its Harmonious Interpretation, C. Sam D’Alba

St. John's Law Review

(Excerpt)

Part I of this Note provides background on the student loan crisis and the history of the nondischargeability of student loan debt. Part II of this Note examines the DOJ’s Guidance on litigating “undue hardship,” the intra-circuit criticism of the Brunner framework, and the need for harmony in understanding “undue hardship” in light of other authority governing student loans. Part III of this Note argues for a shift in the analysis of “undue hardship” based on practical guidance from the DOJ, the DOE, and the courts. This shift focuses on the subjectivities of each bankruptcy case and the need …

What Start-Up Lawyers Should Know About Bankruptcy, Christopher D. Hampson

UF Law Faculty Publications

Bankruptcy has long been regarded as a gloomy area of law, one that fits uneasily with the heady optimism usually associated with start-ups. At the same time, start-up lawyers need to understand how downside scenarios will play out, both inside and outside bankruptcy court, in order to advise their clients appropriately. That is especially true for social enterprises – where the decisions throughout a company’s life affect its ability to stick to its mission during times of financial distress. In a forthcoming book chapter, I map out the various elements that start-up lawyers need to consider.

Bankrupt Crypto Organizations, Kara Bruce, Christopher K. Odinet, Andrea Tosato

Faculty Scholarship

This Article provides the first comprehensive analysis of the intersection between decentralized autonomous organizations (DAOs) and American bankruptcy law. DAOs are blockchain-based entities that enable individuals to pursue common goals using decentralized decision-making and automated governance. Since their recent emergence, DAOs have proliferated dramatically—with over 20,000 organizations managing over $20 billion in assets and engaging in activities ranging from investment management to real estate and even attempting to purchase historic copies of the U.S. Constitution. Yet like any other organization, DAOs can fail, creating an urgent need to understand what happens when unstoppable code meets immovable bankruptcy law.

Our investigation …

The Bankruptcy Judge And The Generalist Tradition, Alexander Gouzoules

Faculty Publications

The prevailing academic consensus is that bankruptcy judges are specialists presiding over specialized courts. This Article contends that this description is incomplete and, in some respects, inaccurate. Drawing on scholarly models of judicial specialization and historical surveys of the field, this Article contends that bankruptcy judges reflect a hybrid design choice: procedural specialization combined with substantive generalism. This model delivers many of the observed benefits of judicial specialization (including efficiency and technical competence) while preserving the cross-pollination of ideas and other benefits associated with the generalist tradition of American judging.

This Article also reflects on contemporary developments—most notably the rise …

Reevaluating Consumer Debt Enforcement: Why We Don’T Need Courts To Enforce Consumer Debt Contracts, Adam Toobin

Fordham Journal of Corporate & Financial Law

Enforcing consumer debt contracts against low- and middle-income borrowers, rather than making consumer debt markets work better, is inefficient and exacerbates consumer protection concerns. While consumer debt litigation—and enforcement of consumer debt contracts through wage and bank account garnishment—may have once strengthened nascent consumer debt markets, consumer credit scoring now effectively structures consumers’ incentives to repay their debt obligations. Debt enforcement is not necessary to encourage consumers to repay their debts and tends to drive borrowers into bankruptcy. Debt enforcement also undermines efforts to provide consumer protection in these markets by raising the stakes of any debt contract—where any default …

Dischargeability Of Student Loan Debt In Bankruptcy Cases, Dean Van Noy

Bankruptcy Research Library

(Excerpt)

Student loan debt represents one of the largest categories of consumer debt in the United States. Currently, statistics show that there is $1.8 trillion in outstanding student-loan debt owed by approximately 42.5 – 45.8 million debtors. This statistic can be attributed to the fact that the cost of higher education has increased significantly. Department of Education data shows that average tuition prices have more than doubled at colleges and universities around the country over the last three decades. As a direct consequence of this continuously increasing cost of tuition, many debtors have struggled to pay back their student-loan debt, …

Corporate Structuring, Ip Holding Companies & Bankruptcy, Ava Sheftick

Bankruptcy Research Library

(Excerpt)

There are various ways in which the founders of a company may structure their business. While a key focus of corporate planning is how to maximize revenue and operate efficiently, minimizing the risk associated with financial distress is an equally important consideration. A corporation’s structure is made during a time of stability, but it must account for the ultimate financial distress—bankruptcy. Asset allocation is a critical step in the planning stage of a business enterprise, especially when considering creditors the company is going to take on. Companies’ intellectual property ("IP") may be highly valuable assets that must be considered …

Batting Around Section 363: Sports Franchise Sales, League Consent, And The Boundaries Of Bankruptcy, Katelyn Pantano

Bankruptcy Research Library

(Excerpt)

The question presented is whether a bankruptcy court may authorize the sale of a professional sports franchise without league consent, and whether bankruptcy courts should permit such sales as a matter of policy.

The client, The New York Bets (“the Bets”), is a professional baseball franchise experiencing financial distress and is considering filing for Chapter 11 bankruptcy to facilitate a sale to a new owner. The MLB’s governing documents require league approval, a three-quarters vote of all club owners, for any ownership transfer. The client is now considering Chapter 11 bankruptcy to avoid this approval process and instead have …

The Equity Dead Zones: Legal Intersectionality Failure Points In Chapter 13 Bankruptcy, Tearria N. Simmons

The Guardianship Journal

Legal intersectionality failure points describe the systemic fractures that occur where overlapping legal, social, and economic inequalities converge, potentially producing compounded barriers to relief. Each failure point marks a site of marginalization. In what ways do individuals already recognized as vulnerable in Chapter 13 bankruptcy face a heightened risk when multiple forms of disadvantage intersect? When these intersections combine in mutually reinforcing ways—racial, economic, and relational disparities colliding with structural deficiencies in family, property, and bankruptcy law—does it result in pronounced negative outcomes, and, if so, what are those outcomes? Within this convergence, could there be a space where compounded …

Opioids And Oblivion: Corporate Bankruptcy And The Erosion Of Accountability In Big Pharma, Ying Yuan

Washington Law Review

In June 2024, the United States Supreme Court ruled in Harrington v. Purdue Pharma that nonconsensual releases for nondebtors are unconstitutional. The decision marked a key development in mass tort litigation involving Purdue Pharma, the company at the center of the opioid crisis. The Sackler family sought to use Purdue’s bankruptcy proceedings to shield themselves from liability, but the Court’s ruling invalidated the use of nondebtor releases to protect third parties from claims without the full consent of affected parties. While the ruling strengthens creditor protections, it creates uncertainty regarding how mass tort bankruptcies can efficiently compensate victims, particularly in …

Judging Bankruptcy Without Distress, Jack Zarin-Rosenfeld

University of Cincinnati Law Review

In Harrington v. Purdue Pharma, the United States Supreme Court rejected the bankruptcy plan of OxyContin producer Purdue Pharma, which purported to settle claims against both Purdue (the bankruptcy debtor) and Purdue’s individual owners and managers, all members of the Sackler family who had not themselves filed for bankruptcy (the Sackler Release). Concluding that the United States Bankruptcy Code does not authorize settlement of claims against non-debtors without claimant consent, the Harrington Court appeared set to stem the tide of “bankruptcy without distress,” a flourishing practice in which solvent non-debtors (like the Sacklers) would settle their liabilities within the …

Crypto In The Courtroom: A Legislative Framework For Managing Crypto Assets In Bankruptcy, Katelyn E. Barker

University of Miami Law Review

The rapid rise and subsequent collapse of the cryptocurrency market exposed a critical shortcoming of bankruptcy law: the absence of clear guidelines for the treatment of crypto assets. The Bankruptcy Code—which predates the invention of crypto—fails to account for the unique complexities of crypto assets. Although several crypto bills have been introduced, they fall short of adequately confronting the complex and evolving challenges of crypto bankruptcies. The lack of guidance has forced courts to make consequential decisions with no clear direction, leading to inconsistent outcomes in areas such as crypto asset ownership, valuation, and customer protections.

This Note examines bankruptcy …

Relief And Its Costs: The Need For A Congressional Response To The Aftermath Of Harrington V. Purdue Pharma, Emma Skeen

William & Mary Law Review

This Note explores the fallout of the Harrington v. Purdue Pharma decision and the uncertainty it lends to the future of bankruptcy plans and third-party releases. Specifically, it proposes potential congressional solutions that can pave a path forward for parties to seek relief for the harms they have suffered under the actions of corporations and their leaders. Part I provides background information on the use of nonconsensual third-party releases in bankruptcy cases and their controversial nature. Part II analyzes the Supreme Court’s settling of that controversy in Harrington and the bases that it relied on in doing so. Part III …

Vestigial Fiscal Constitutions, Joe Schomberg

St. John's Law Review

(Excerpt)

This Article examines the history and original intent of fiscal constitutions in the United States, providing helpful context for their usefulness today. It argues that, due to the rigidity of states’ fiscal constitutions, they are ultimately ineffective at preventing state and local governments from incurring more and more debt. Ultimately, it suggests that the weakness of state fiscal constitutions is a result of their functionality being overtaken by increased efficiencies in the capital markets and Tiebout-Tullock markets. Our state fiscal constitutions have suffered the same fate as our wisdom teeth or appendixes—they have become less useful and less relied …

Where Singapore Meets Asean: Shaping Insolvency Reform For Micro And Small Enterprises, Lovein Leying Sui

Singapore Law Journal (Lexicon)

Given the economic dependence on micro and small enterprises (MSEs) in the ASEAN region, the MSE insolvency regime is of paramount regional importance. Evidence indicates that the ASEAN region has prioritised the improvement of such a regime, especially after the financial instability following the COVID-19 pandemic. This paper explores how trends in ASEAN MSE insolvency can inform Singapore’s insolvency reforms to improve MSE access and efficiency, while also considering broader implications for the region.

The Defamation-To-Bankruptcy Pipeline In The United States And Around The World, Christopher D. Hampson

UF Law Faculty Publications

It has never been easier to ‘go viral’. With nothing more than a microphone, a smartphone, and some computer software, an influencer in today’s media landscape can reach millions. But that ease comes with risk: defamation lawsuits are on the rise, sending content creators to bankruptcy courts with judgments that far exceed everything they own. Last year, I analysed this trend in American law, which I call the ‘defamation-to-bankruptcy pipeline’, in Defamation, Bankruptcy & the First Amendment, published in the Journal of Free Speech Law.

The Potential Of Protection System Of Curator And Administrator Profession In Indonesia (Comparative Analysis Of Curator And Notary Profession In Indonesia), Banat Aghniya Ghassani Yudistira

Technology and Economics Law Journal

This thesis explores the potential need for a protection system for curators and administrators in Indonesia’s bankruptcy proceedings, highlighting their vulnerability to criminalization despite fulfilling roles mandated by law. The study begins by outlining the duties and responsibilities of curators and administrator under Law No. 37 of 2004 on Bankruptcy and Suspension of Debt Payment Obligations (UU KPKPU), emphasizing their legal obligation to manage and settle bankrupt assets independently and without conflict of interest. However in practice, curators and administrators often face legal threats and being criminalized, including police reports and criminal charges, merely for executing duties outlined in the …

Effectuating The Purposes Of Chapter Xiii Of The Bankruptcy Act, John J. Ryan

Maine Law Review

The United States Congress is presently considering a bill sponsored by the National Bankruptcy Conference. This proposal would alter certain sections of chapter XIII of the Bankruptcy Act. Included in the proposed general revision are major changes in two provisions central to the operation of the statute. These provisions, contained in sections 6524 and 614, were originally intended as the mechanisms with which bankruptcy courts were to resolve the basic conflict between the overall purposes of chapter XIII and the rights of secured creditors. As recently as 1969, in Terry v. Colonial Stores Employee's Credit Union of Atlanta, a court …

Bankruptcy Courts In Transition Toward Debtor Rehabilitation, Conrad K. Cyr

Maine Law Review

This article attempts primarily to cope with the so-called debtor relief provisions of the Bankruptcy Act rather than with its ordinary or straight bankruptcy provisions. The different emphasis upon liquidation in ordinary bankruptcy and rehabilitation in debtor relief proceedings justifies their separate treatment. It must be cautioned, however, that not only the philosophy but many of the administrative and procedural precepts of chapters I-VII of the Bankruptcy Act are incorporated, either by word or implication, into the debtor relief chapters. Moreover, most types of cases filed under the Bankruptcy Act are administered by the same personnel in the same court …

Corporate Evolution, Omari Scott Simmons

Cardozo Law Review

Political entrepreneurs have declared war on environmental, social, and governance policies ("ESG"), going so far as to attempt to criminalize ESG-influenced investing. They seek a return to some real or imagined past. They amplify and elevate their efforts into mainstream public discourse. They pursue extraordinary goals and tactics to disrupt and even dismantle institutional structures, norms, and established processes. The contemporary anti-ESG backlash is not simply a battle over corporate purpose and the dueling perspectives of shareholder primacy versus stakeholderism or disputes concerning sustainable investment and operational strategies. It reflects aggressive political entrepreneurship and the tension between competing narratives: stasis, …

Equity And Clarity: The Impact Of Tyler V. Hennepin County On Property Taxation And Homeowners’ Rights, Analy Feigel

Cardozo Law Review

This Note explores the implications ofthe U.S. Supreme Court's ruling in Tyler v. Hennepin County, which significantly impacts property taxation and foreclosure laws. The Court ruled that property owners are entitled to surplus proceeds following a tax foreclosure, setting a new precedent by deeming it unconstitutional for governments to retain surplus proceeds without just compensation. Tyler clarified property rights under the Fifth Amendment, affirming that owners have a constitutional right to the surplus value of their foreclosed properties, even if local statutes do not explicitly allow it.

Further, this Note also addresses unresolved issues following Tyler's ruling, including how the …

Debt Tokens, Andrea Tosato, Diane Lourdes Dick, Christopher K. Odinet

Faculty Scholarship

The worlds of crypto and bankruptcy have collided. Once-prominent, fast-growing, and even politically influential platforms for trading cryptocurrencies have imploded spectacularly. Gone are the glossy advertisements, celebrity endorsements, and proclamations that blockchain operates as a law unto itself. Instead, insolvent crypto businesses—including the crypto exchange giant FTX—find themselves in bankruptcy court, no different from any other failed enterprise. These bankruptcies reveal a startling reality: individual investors who placed their trust in these platforms have been stripped of their digital assets. In their stead, they hold hard-to-collect claims against these defunct platforms.

Amid the chill of the crypto winter, bankruptcy has …

A Lawyer’S Duty To Maintain Prospective Client Confidentiality To Avoid Disqualification In Bankruptcy Matters, Victoria Rey

Bankruptcy Research Library

(Excerpt)

The legal profession imposes strict ethical duties on attorneys to maintain client confidentiality. While this duty is traditionally associated with formal attorney-client relationships, it also extends to prospective clients–individuals who consult an attorney about potential representation, even if they do not ultimately retain the attorney. In bankruptcy proceedings, where prospective clients often disclose sensitive financial information, the duty of confidentiality is crucial. This duty is essential for preserving the integrity of the bankruptcy process, preventing conflicts of interest, and ensuring fairness for all parties involved. As a result, a breach of this duty may warrant the disqualification of counsel. …

Debt Tokens, Andrea Tosato, Diane Lourdes Dick, Christopher K. Odinet

Faculty Journal Articles and Book Chapters

The worlds of crypto and bankruptcy have collided. Once-prominent, fast growing, and even politically influential platforms for trading cryptocurrencies have imploded spectacularly. Gone are the glossy advertisements, celebrity endorsements, and proclamations that blockchain operates as a law unto itself. Instead, insolvent crypto businesses—including the crypto exchange giant FTX—find themselves in bankruptcy court, no different from any other failed enterprise. These bankruptcies reveal a startling reality: individual investors who placed their trust in these platforms have been stripped of their digital assets. In their stead, they hold hard-to-collect claims against these defunct platforms. Amid the chill of the crypto winter, bankruptcy …

Litigation, Reform, And The Opioid Crisis: From Mdl To Bankruptcy, Abbe R. Gluck

Touro Law Review

Can bankruptcy solve a public health crisis? Bankruptcy has taken center stage in complex civil litigation, and the massive opioid litigation is no exception. The U.S. Supreme Court in 2024 decided its first recent case about the intersection of bankruptcy and modern public harms litigation in Harrington v. Purdue Pharma L.P., a decision that brought to the fore pressing questions about the increasing use of bankruptcy in mass torts. In raising concerns about bankruptcy courts being used as a “roving commission to solve all such problems” in complex civil litigation,” the case potentially signals the Court’s growing discomfort with creative …

The Gift Of Exit Financing, Robert W. Miller

Marquette Law Review

Aggressive liability management exercises have spilled over into bankruptcy court and exit financing is often the prize in the center of the arena. Debtors no longer rely upon gifting, the traditional strategy for buying plan support. Instead, they can replicate gifting’s benefits in a more defensible package by funneling discounted subscription rights to chosen constituencies as part of exit financing.

Recognizing exit financing’s distortive power, courts responded by evaluating the quality of negotiations and reviewing precedent transactions. Meanwhile, commentators suggest heightened monitoring and informal guardrails. All of these approaches ignore the shortcomings of judicial valuation. Market testing is the only …