Bankruptcy Law Commons^™

Anna Nicole's Constitutional Estates Law Legacy, David Fagundes

Faculty Articles

This Essay examines Anna Nicole's surprising constitutional estates legacy in three parts. First, it overviews the bitter litigation between Anna Nicole and the estate of J. Howard Marshall II. It then turns to the pair of Supreme Court cases spawned by that litigation. Part II discusses the holding and significance of Marshall v. Marshall, a successful challenge to the scope of the wills exception to federal jurisdiction. Part III dis­cusses the holding and significance of Stern v. Marshall, which held that Article I bankruptcy judges cannot enter final judgments on state law counterclaims. In its Conclusion, the Essay …

A Bona Fide Dispute: Can Bankrupt Debtors Sell Assets Free And Clear Of Federal Civil Forfeiture Claims?, Joseph Peter Gomez

Fordham Journal of Corporate & Financial Law

Auctions are wheeling-dealing extravaganzas in which frenzies of bidders fight over shiny objects. What would happen if the government busted down the doors of the auction house, took the shiny objects, and sold them online? An asset sale through section 363(b) of the Bankruptcy Code provides a court-supervised opportunity to maximize economic value for the bankruptcy estate. To sell estate assets, the debtor must either (1) pay off each creditor holding an interest in the assets or (2) strip the creditor’s interest and attach it to the proceeds of the sale. When the government asserts a civil forfeiture claim against …

The Lease Of All Evils: How A Middle-Ground Approach Can Resolve The Bankruptcy Code Conflict Between Section 363(F) Sales And Section 365(H) Lessee Protections, Kate Christensen

Fordham Journal of Corporate & Financial Law

The Fifth Circuit’s recent decision in In re Royal St. Bistro, LLC has awakened an unsettled issue in the Bankruptcy Code that has divided the bankruptcy community for over two decades. The question examined by the Fifth Circuit was whether a non-debtor lessee with a right to continued possession through section 365(h) of the Bankruptcy Code loses this right if the debtor-lessor can sell its property “free and clear” under section 363(f). While early decisions held that section 365(h) always protects lessees against debtors’ free and clear sales, some subsequent decisions created a circuit split by ruling that section 365(h) …

Weed Like Our Money Back: Amending Pennsylvania’S Medical Cannabis Law For Insolvent Cannabusinesses, Nikolajs V. Gaikis

Dickinson Law Review (2017-Present)

In 2016, Pennsylvania joined what is now 37 states and the District of Columbia in legalizing medical cannabis. The Commonwealth’s cannabusinesses share in a struggle that is common in other legal jurisdictions: operating within the confines of the Controlled Substances Act and the Bankruptcy Code. Insolvent individuals and businesses that profit from cannabis or hold cannabis assets cannot declare bankruptcy because cannabis is a Schedule I drug. Under state law, other insolvency alternatives like an assignment for the benefit of creditors, receiverships, and compositions with creditors exist as potential alternatives.

Pennsylvania’s insolvent cannabusinesses are in a uniquely poor position because …

Designing Designer Bankruptcy, Michael A. Francus

Journal Articles

Today's mass torts are headed to bankruptcy. Be it Purdue Pharma 's opioids, United States of America (USA) Gymnastics' sexual abuse, Pacific Gas and Electric Company's (PG&E) wildfires, or Johnson & Johnson 's talc, masstort defendants have determined that bankruptcy-not class actions, multi district litigation, or one-off state suits-is the way to manage their mass-tort liability. But today's mass-tort bankruptcy is not the mass-tort bankruptcy of yesteryear, when the whole business filed for bankruptcy. Instead, these modern mass-tort bankruptcies are designer bankruptcies, where the defendant uses its corporate structure to choose which assets and which liabilities enter bankruptcy. To take …

Rethinking Antebellum Bankruptcy, Rafael I. Pardo

Scholarship@WashULaw

Bankruptcy law has been repeatedly reinvented over time in response to changing circumstances. The Bankruptcy Act of 1841—passed by Congress to address the financial ruin caused by the Panic of 1837—constituted a revolutionary break from its immediate predecessor, the Bankruptcy Act of 1800, which was the nation’s first bankruptcy statute. Although Congress repealed the 1841 Act in 1843, the legislation lasted significantly longer than recognized by scholars. The repeal legislation permitted pending bankruptcy cases to be finally resolved pursuant to the Act’s terms. Because debtors flooded the judicially understaffed 1841 Act system with over 46,000 cases, the Act’s administration continued …

Section 546(E) Safe Harbor Provision Applies To Transactions Involving Private Securities, Nino Aspanadze

Bankruptcy Research Library

(Excerpt)

A bankruptcy trustee may not avoid a margin or settlement payment made by, to, or for the benefit of a financial institution (or another covered entity) when the payment is made in connection with a securities contract as defined in section 741(7) of title 11 of the United States Code (the "Bankruptcy Code"). "A transfer is ‘in connection with' a securities contract if it is 'related to' or 'associated with’ the securities contract.' A bankruptcy trustee may avoid a covered transaction only if it was made with actual intent to hinder, delay, or defraud creditors. The purpose of Section …

Foreclosure Sales As Fraudulent Transfers, David G. Carlson

Articles

The Supreme Court has declared that noncollusive, regularly conducted foreclosure sales are not “constructive” fraudulent transfers voidable by a bankruptcy trustee Uniform state legislation ratifies this instinct for private creditor enforcements. But collusive or irregular foreclosure sales or sales that are intended to hinder, delay, or defraud creditors are subject to creditor attack, even though unsecured creditors are not proper parties to the foreclosure process. In such cases, unsecured creditors can cloud the title obtained from foreclosure in the cases of collusion, irregularity or fraudulent intent. This article examines precisely when foreclosure sales can be avoided by unsecured creditors of …

Johnson, John T., 1820-1875 (Sc 3699), Manuscripts & Folklife Archives

Manuscript Collection Finding Aids

Finding aid and scan (Click on "Additional Files" below) for Manuscripts Small Collection 3699. Case file for T. T. Melburn v. John T. Johnson, U.S. District Court for the District of Kentucky, filed 26 May 1870. Petitioner Melburn, a carpenter and stair builder of Bowling Green, Kentucky, sought an accounting for transactions during his 1869-1870 partnership with Johnson, also a carpenter, of Woodburn, Kentucky, claiming that Johnson had misappropriated assets of the firm and had committed an act of insolvency by transferring land to a relative. The inquiry, conducted by Warner Underwood as Register in Bankruptcy, included depositions from …

Divide, "Two-Step," And Conquer: How Johnson & Johnson Spurred The Bankruptcy System, Patrick Maney

University of Cincinnati Law Review

No abstract provided.

A Historical Account Of The Orderly Payment Of Debts Act Reference: Limiting Provincial Efforts To Protect Insolvent Debtors, Thomas Gw Telfer, Virginia Torrie

Dalhousie Law Journal

This paper analyzes the history of the Alberta Orderly Payment of Debts Act and the constitutional controversy that followed. The legislation sought to protect debtors by imposing restrictions on creditors. In 1960, the Supreme Court of Canada in Reference re Validity of Orderly Payment of Debts Act, 1959 (Alberta) ruled that the legislation was ultra vires on the basis that it interfered with the federal bankruptcy and insolvency power. The Orderly Payment of Debts Act reference is the capstone in a trilogy of cases in which provincial legislation was invalidated for encroaching upon the federal bankruptcy and insolvency power. The …

Silencing Litigation Through Bankruptcy, Pamela Foohey, Christopher K. Odinet

Faculty Scholarship

Bankruptcy is being used as a tool for silencing survivors and their families. When faced with claims from multiple plaintiffs related to the same wrongful conduct that can financially or operationally crush the defendant over the long term—a phenomenon we identify as onslaught litigation—defendants harness bankruptcy’s reorganization process to draw together those who allege harm and pressure them into a swift, universal settlement. In doing so, they use the bankruptcy system to deprive survivors of their voice and the public of the truth. This Article identifies this phenomenon and argues that it is time to rein in this destructive use …

The Housing Bubble And Consumer Banruptcy (Parts Iii And Iv), David G. Carlson

Articles

During the COVID pandemic housing prices have soared. Consumers who have filed for bankruptcy are now looking at enormous realized and unrealized capital gains. This article assesses the chances that these consumer debtors can keep these gains out of the hands of their creditors. Part II of this two-part article addresses chapter 13 issues, which concern plan modification by the chapter 13 trustee to capture realized and unrealized capital gains. It also covers whether a trustee in a converted case can capture these gains. The law of the coverted chapter 7 case is spectacularly contradictory.

Consumer Protection & Bankruptcy Law—Rewarding Repayment: Removing The Fear From Crushing Student Loan Debt Through Alternatives To Discharge, Sarah Holden

University of Arkansas at Little Rock Law Review

No abstract provided.

Modular Bankruptcy: Toward A Consumer Scheme Of Arrangement, John A. E. Pottow

Law & Economics Working Papers

The world of international bankruptcy has seen increasing use of the versatile scheme of arrangement, a form of corporate reorganization available under English law. A key feature of the scheme is its modularity, whereby a debtor can restructure only a single class of debt, such as bond indentures, without affecting other debt, such as trade. This is the opposite of chapter 11 of the U.S. Bankruptcy Code’s comprehensive reckoning of all financial stakeholders. This article considers a novel idea: could the scheme be transplanted into the consumer realm? It argues that it could and should. Substantial benefits of more individually …

The Housing Bubble And Consumer Bankruptcy (Parts I And Ii), David G. Carlson

Articles

During the COVID pandemic housing prices have soared. Consumers who have filed for bankruptcy are now looking at enormous realized and unrealized capital gains. This article assesses the chances that these consumer debtors can keep these gains out of the hands of their creditors. Part I of this two-part article addresses chapter 7 issues, which concern lien stripping, abandonment, and monetary exemptions. It also addresses lien stripping in chapter 13 cases. Part II will address whether a chapter 13 debtor must surrender appreciation value to the chapter 13 trustee or to a trustee in a converted chapter 7 case.

The Bankruptcy Of Purdue Pharma In The Wake Of Big Tobacco, Jacob Hedgpeth

University of Colorado Law Review Forum

Two distinct public health crises shook the United States from 1954 to 2023: nicotine addiction from tobacco products, and opioid addiction starting with Purdue Pharmaceutical’s OxyContin. These crises resulted in millions of deaths and immense costs to the country as a whole. The nicotine crisis ended in a national settlement against four major tobacco manufacturers, which yielded hundreds of millions of dollars for those harmed by these products. The owners of Purdue, however, opted for bankruptcy instead of settlement, keeping the majority of the money made from OxyContin for Purdue’s owners, the Sackler family.

These four tobacco giants and Purdue …

Due Process Discontents In Mass-Tort Bankruptcy, J. Maria Glover

Georgetown Law Faculty Publications and Other Works

No abstract provided.

Overcoming The Presumption Of The Deceitful Debtor, Rebecca Rhym

Georgia State University Law Review

Congress codified presumed consumer debtor abuse into the Bankruptcy Code with the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Since then, distrust of low- and middle-class debtors has permeated the legal system, evidenced most visibly by how easily legislators are swayed by creditor lobbyists’ rhetoric. This distrust has also reached our courts, where judges invoke the doctrine of judicial estoppel to bar debtor-plaintiffs from pursuing tort claims undisclosed in bankruptcy petitions. Instead of addressing societal problems underlying the high number of bankruptcy filings, like financial literacy and predatory lending, this Note argues that lawmakers and courts are perpetuating …

Right For Any Reason, Jeffrey M. Anderson

Cardozo Law Review

The chances of winning an appeal in federal court are slim. One reason for that is an array of rules of appellate review that “stack the deck” in favor of the appellee and the lower court’s judgment. One such rule of review is “right for any reason,” the rule that an appellee may defend a lower court’s judgment on any grounds supported by the record—even grounds that the lower court rejected or ignored. The judgment may be right, even if the reasons are wrong. In 1924, the Supreme Court described the rule as “settled”—and felt no need to cite authority …

Tinjauan Hukum Penerapan Hak Mendahulu Utang Pajak Dalam Perkara Kepailitan Pt Industries Badja Garuda Berdasarkan Undang-Undang Nomor 37 Tahun 2004 Tentang Kepailitan Dan Penundaan Kewajiban Pembayaran Utang, Siti Fatimah Citra Nurislamiati

"Dharmasisya” Jurnal Program Magister Hukum FHUI

This paper discusses the application of pre-emptive rights over tax debt collection in bankruptcy disputes regulated in Article 41 paragraph (3) of Law Number 37 of 2004 concerning the Bankruptcy and Deferral of Debt Payment Obligations displayed by the Directorate General of Taxes. Tax debts outside the bankruptcy process for compulsory taxes are being filed for bankruptcy by requesting the Commercial Court to return all tax liabilities that would harm the interests of the country. In the event that a taxpayer has been declared bankrupt, the Directorate General of Taxes still has the right to overtake and is privileged, requesting …

Bespoke, Tailored, And Off-The-Rack Bankruptcy: A Response To Professor Coordes's 'Bespoke Bankruptcy', Christopher D. Hampson

UF Law Faculty Publications

Toward the end of every semester that I teach bankruptcy, I let my students vote on which “non-traditional” insolvency regimes they would like to study, including municipal bankruptcy, sovereign bankruptcy, and financial institutions. What I am really trying to do is convey to the students that the default procedures and substantive rules in Chapters 7 and 11 of the U.S. Bankruptcy Code do not apply to all types of enterprises.

Without Reservation: Ensuring Uniform Treatment In Bankruptcy While Keeping In Mind The Interests Of Native American Individuals And Tribes, Connor D. Hicks

Fordham Journal of Corporate & Financial Law

The Bankruptcy Code (“Code”) exists as a mechanism for good faith debtors to discharge debts and seek a “fresh start” in life and finance. 11 U.S.C. § 106(a) ensures that not only are all debtors treated uniformly, but that all creditors, including governmental creditors which may otherwise enjoy immunity from suit, are equally subject to the jurisdiction of Bankruptcy courts and bound to the provisions of the Code.

However, a recent circuit split has demonstrated one niche yet significant instance in which a debtor may not receive the same treatment as their counterparts. While § 106 contains an express waiver …

Silencing Litigation Through Bankruptcy, Pamela Foohey, Christopher K. Odinet

Scholarly Works

Bankruptcy is being used as a tool for silencing survivors and their families. When faced with claims from multiple plaintiffs related to the same wrongful conduct that can financially or operationally crush the defendant over the long term—a phenomenon we identify as onslaught litigation—defendants harness bankruptcy’s reorganization process to draw together those who allege harm and pressure them into a swift, universal settlement. In doing so, they use the bankruptcy system to deprive survivors of their voice and the public of the truth. This Article identifies this phenomenon and argues that it is time to rein in this destructive use …

Stakeholderism Silo Busting, Aneil Kovvali

Articles by Maurer Faculty

The fields of antitrust, bankruptcy, corporate, and securities law are undergoing tumultuous debates. On one side in each field is the dominant view that each field should focus exclusively on a specific constituency—antitrust on consumers, bankruptcy on creditors, corporate law on shareholders, and securities regulation on financial investors. On the other side is a growing insurgency that seeks to broaden the focus to a larger set of stakeholders, including workers, the environment, and political communities. But these conversations have largely proceeded in parallel, with each debate unfolding within the framework and literature of a single field. Studying these debates together …

Sales Free And Clear Of An Intellectual Property Licensee's Interests In Bankruptcy -- Looking To In Re Tempnology For Guidance, Summer Chandler

Journal Articles

Uncertainty surrounds many issues that exist at the intersection of bankruptcy law and intellectual property law. Section 363(f) of the Bankruptcy Code permits the debtor to sell assets free of a third party’s interest in such assets, provided one or more preconditions is satisfied. When a debtor rejects a license agreement pertaining to the debtor’s intellectual property, however, § 365(n) of the Bankruptcy Code allows the licensee to choose to retain its rights to use the intellectual property that was the subject of the rejected license agreement. One unsettled question is whether a debtor may sell intellectual property pursuant to …

The Purloined Debtor: Edgar Allan Poe’S Bankruptcy In Law And Letters, Erin L. Sheley, Zvi Rosen

Faculty Scholarship

This Article represents the first interdisciplinary case study of Edgar Allan Poe’s bankruptcy as an inflection point in the legal and cultural history of debt. Although Poe hardly leaps to mind for portrayals of legal procedure, much of his oeuvre reveals a terror of legal process as an interstitial principle. The anxiety around identity in Poe’s work reveals an ongoing struggle between an individual subject and two opposing yet equally degenerate legal statuses: possession and indebtedness. This opposition renders a distinct form of legal process legible in these texts: the then emerging law of bankruptcy. Poe declared bankruptcy at a …

The Intersection Of The Bankruptcy Courts And Ferc, Amanda Gazzo

Bankruptcy Research Library

(Excerpt)

In the past, the bankruptcy courts and the Federal Energy Regulatory Commission (“FERC”) have been involved in a power struggle with one another. Congress has granted bankruptcy courts exclusive authority to allow debtors to reject executory contracts in chapter 11 reorganization cases. Additionally, Congress has granted FERC authority to govern over utility entities’ filed-rates, which are sometimes contained in executory contracts. It is in this intersection, regarding executory contracts containing filed-rates, where the power struggle between the two exists.

An executory contract is a contract where both parties still have material obligations to perform under the contract. Filed-rates may …

Two Valid Approaches For Determining Whether “Taxes” Get Priority In Bankruptcy Cases, Jonathan Fuller

Bankruptcy Research Library

(Excerpt)

In bankruptcies, tax status often effects whether claims are entitled to priority. Thus, debates about whether charges are penalties or taxes date back to the early twentieth century. In 1930, the Supreme Court established that courts are not bound to the characterization given to a charge by the municipality that created it. Rather, courts have a duty to consider the “real nature” and “effect” of the charge. Accordingly, different circuits have implemented different approaches to make these determinations.

This Article examines the ambiguity among circuits regarding charges’ “tax” status and resulting priority entitlement. Part I outlines In re Lorber …

Third-Party Releases Under The Bankruptcy Code After Purdue Pharma, Jeanne L. Schroeder, David G. Carlson

Articles

The biggest bankruptcy case ever (as measured by unsecured claims against a debtor-in-possession) is In re Purdue Pharma, LLC. The bankruptcy court affirmed a plan discharging the Sackler family (equity owners and often officers of Purdue) of all “derivative” claims that belonged to the debtor-in-possession. The settlement was bought for a substantial sum payable over time by the Sacklers. A debtor-in-possession is the sole owner of a derivative claim and has the power to bind all the creditors to a settlement. Under the Bankruptcy Code, a plan discharging derivative claims is confirmable. In fact, as we will, show, a great …