Bankruptcy Law Commons^™

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 …

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 …

Directors’ Fiduciary Duties In The Likelihood Of Insolvency, Miguel Martínez Muñoz

Fordham Journal of Corporate & Financial Law

The purpose of this Essay is to analyze the Directive and its interaction with American law in order to establish some considerations in coordinating the provisions of insolvency and corporate law. This Essay focuses on the configuration of a new framework of directors’ liability in which, among other aspects, the identity of the parties subject to the duties is expressly defined, as well as the application of the rules regulating the protection of corporate discretion as well as the application of the rules regulating the business judgment rule. In turn, the Essay puts forward some proposals for a solution to …

The New Framework For Directors’ Duty To Creditors And The Challenges Ahead – Foo Kian Beng V Op3 International Pte Ltd (In Liquidation) [2024] 1 Slr 361, Jonathan Ren Hao Cheong

Singapore Law Journal (Lexicon)

In Foo Kian Beng v OP3 International Pte Ltd (in liquidation) [2024] 1 SLR 361, the Singapore Court of Appeal introduced a two-step, three-category framework for evaluating whether a director has breached his fiduciary duty to consider the interests of creditors. This decision not only affirms the traditional understanding of the duty in other common law jurisdictions but also provides directors with clearer guidance on managing the affairs of the company in times of financial distress. This article builds upon the discussion in Foo Kian Beng by evaluating the new framework established by the SGCA. It also identifies potential challenges …

Law School News: John Dorsey L'10 Selected For U.S. Bankruptcy Court In Rhode Island 6-7-2025, Helga Melgar

Life of the Law School (1993- )

No abstract provided.

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 …

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 …

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

Articles

In the world of cross-border corporate insolvency, those in the know are familiar with the increasingly popular scheme of arrangement, the British quasi-reorganization procedure that allows a company to restructure some, but not all, of its debt. The typical scheme effects a corporate balance sheet reshuffling by supermajoritarian approval (and judicial "sanction") but often leaves other debt, such as the trade, untouched. A key conceptual component of the scheme mechanism is its intentional modularity, called by some its "selectivity." It does not require a comprehensive reckoning of all claims against a given debtor, only some. The scheme has proved popular-so …

Just Consumer Financial Protection: Prevention Or Cure, Andrea Boyack

Faculty Publications

This article examines the relationship between two complementary and related consumer financial protection approaches: regulatory oversight of financing terms (ex ante protection) and bankruptcy discharge of consumer debts (ex post protection). Although often conceptualized as distinct areas of law, consumer financial regulation and consumer bankruptcy are two sides of the same coin and function together to treat the harms of financial distress. This article seeks to explore the relationship and tensions between these various approaches by juxtaposing consumer debtor-creditor law attitudes and legal developments in continental Europe (primarily France and Germany) with those in the United States. After …

The Myth Of Debtor-Friendly Or Creditor-Friendly Insolvency Systems: Evidence From A New Global Insolvency Index, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

This article seeks to test the validity of the traditional classification of insolvency systems as debtor-friendly or creditor-friendly jurisdictions. For that purpose, the article develops a novel Global Insolvency Index (“GII”) that seeks to measure the attractiveness of reorganization procedures from the perspective of debtors, secured creditors and general unsecured creditors. After assessing the attractiveness and evolution of reorganization procedures in 53 jurisdictions around the world, it will be shown that insolvency systems can be pro-debtor and pro-creditor, anti-debtor and anti-creditor, or somewhere in the middle. Hence, the GII developed in this article shows that the traditional classification of insolvency …

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 …

Reverse Vesting Orders – Developing Principles And Guardrails To Inform Judicial Decisions, Janis P. Sarra

All Faculty Publications

Reverse vesting orders (RVO) are a new tool being used by insolvency practitioners in Canada’s Companies’ Creditors Arrangement Act (CCAA) and other insolvency proceedings, where the debtor is not required to propose a restructuring plan and creditors are not permitted a vote on the going-forward strategy. The article starts from the premise that the court has authority to approve an RVO pursuant to sections 11 and 36 of the CCAA and the court’s general authority under the statute. However, it suggests that there must be exceptional circumstances for the court to be persuaded to bypass provisions of insolvency legislation aimed …

Enforceability Of Third-Party Releases In Foreign Proceedings Under Chapter 15, Anastasia Greer

Bankruptcy Research Library

(Excerpt)

In our increasingly globalized world, cross-border insolvency proceedings brought under chapter 15 (herein "Chapter 15") of title 11 of the United States Code (the "Bankruptcy Code") are on the rise - with over 100 additional filings in 2020 alone. Third-party releases are provisions in bankruptcy plans intended to release non-debtors (including shareholders, directors, officers, and affiliates) from claims creditors hold against other members of their class. A third­ party release can "act as a complete release, waiver, and discharge of that party ... arising out of or in connection with the debtor and its plan of reorganization." While the …

Implementing An Insolvency Framework For Micro And Small Firms, Aurelio Gurrea-Martinez

Research Collection Yong Pung How School Of Law

Micro-, small-, and medium-sized enterprises (MSMEs) represent the vast majority of businesses in most countries around the world. Despite the economic relevance of these firms, most insolvency jurisdictions do not provide adequate responses to MSMEs. Moreover, with a few exceptions, the academic literature on insolvency law has not traditionally focused on the treatment of MSMEs in insolvency. This article seeks to contribute to the debate by exploring the primary features and problems of MSMEs in insolvency as well as the weaknesses of the ordinary insolvency framework to deal with MSMEs. It also provides a general overview of the primary reforms …

To Stay Or Not To Stay? A Clash Of Arbitration And Insolvency Regimes, Darius Chan, Sidharrth B Rajagopal

Research Collection Yong Pung How School Of Law

In the wake of the global Coronavirus disease 2019 (COVID-19) pandemic, a rise in creditorinitiated winding-up proceedings is likely to be impending in coming years (See e.g., RCMA Asia Pte. Ltd. v. Sun Electric Power Pte. Ltd. [2020] SGHC 205). At the same time, geopolitical developments, such as the scale and ambition of Belt & Road Initiative projects, have raised questions over the issue of debt sustainability. Given the prevalence of arbitration clauses in modern international commercial and project agreements, the interplay and relationship between insolvency and dispute resolution, and especially arbitration, requires careful attention. While the intersections between the …

Bank Resolution And Creditor Distribution: The Tension Shaping Global Banking –Part Ii: The Cross-Border Dimension, David Ramos, Javier Solana

University of Miami Business Law Review

New bank resolution frameworks that aim to address the complex task of managing the collapse of a large financial institution stand in considerable tension with basic principles and policy objectives of insolvency law. In this two-part study, we present an analytical framework that aims at helping us understand how this tension can undermine the effectiveness of the new bank resolution frameworks. In the first part of this article, we introduced our three-layered framework and explored its first two layers: the group dimension, and the duality of crisis-prevention and crisis-management tools. In this Part II, we explore the last layer: the …

Impact Of The Italian Business Crisis And Insolvency Code On Organizational Structures In Msmes, Alessandra Zanardo

University of Miami International and Comparative Law Review

In September 2021, the Italian Bankruptcy Law will be replaced by a new comprehensive Act, the so-called Business Crisis and Insolvency Code.

Two topics have immediately become the “mantra” of this important reform: a) the introduction into the domestic legal framework of early warning tools and alert procedures, along the lines of the French experience; and b) the introduction of a specific obligation on the entrepreneur or the management body of collective entities to implement suitable measures or establish appropriate organizational structures to prevent future insolvency and preserve the business continuity.

These measures are closely related, insofar as the obligation …

Resolving Corporate Insolvencies In China: The Gap Between Law And Reality, Dr. Zhang Zinian

University of Miami International and Comparative Law Review

This article examines how corporate insolvencies in China, the second largest economy, are handled under the current legislation, the China Enterprise Bankruptcy Law of 2006. Relying on the fresh empirical data arising from the first ten years on the use of China’s three insolvency procedures, reorganization, composition and liquidation, this article reveals the huge gap between the law in the books and the law in action, arguing that the implementation of this law in China perhaps has not achieved the legislative objectives. The constitutional and institutional weaknesses affecting the application of this law are analyzed

The Low Usage Of Bankruptcy Procedures: A Cultural Problem? Lessons From Spain, Aurelio Gurrea-Martínez

University of Miami International and Comparative Law Review

While filing for bankruptcy does not seem appealing for any debtor regardless of the jurisdiction, the reluctance to use the bankruptcy system varies across countries. This article explores the underlying reasons and economic effects of the low usage of bankruptcy procedures in Spain, where the rate of business bankruptcies is one of the lowest in the world. Some authors have argued that the low usage of bankruptcy procedures in Spain is due to a “cultural” problem faced by Spanish entrepreneurs. According to this hypothesis, the lack of a “bankruptcy culture” makes Spanish entrepreneurs afraid to use the bankruptcy system. In …

Bankruptcy For Cannabis Companies: Canada’S Newest Export?, Stephanie Ben-Ishai

University of Miami International and Comparative Law Review

No abstract provided.

Small Business And Bankruptcy: Recent Changes In Kosovo And The United States Compared, Bruce A. Markell

University of Miami International and Comparative Law Review

United States, small businesses account for 99.7% of all employers, and about 47.3% of private sector employment.1 In the European Union (EU) non-financial business sector, SMEs accounted for 99.8% of all enterprises.2 These enterprises employed almost ninety-eight million people—66.6% of total employment—in the EU.

SMEs are variously defined. In the United States, until recently the definition of an SME was an enterprise that employed less than 500 individuals.4 In the EU, SMEs are defined as businesses which employ less than 250 staff and have an annual turnover of less than €50 million, or whose balance sheet total is less than …

Value Tracing And Priority In Cross-Border Group Bankruptcies: Solving The Nortel Problem From The Bottom Up, Edward J. Janger, Stephan Madaus

University of Miami International and Comparative Law Review

No abstract provided.

Cryptocurrencies, Cybersecurity And Bankruptcy Law: How Global Issues Are Globalizing National Remedies, Renato Mangano

University of Miami International and Comparative Law Review

The market for cryptocurrencies is interspersed with cases of loss, theft and fraud and a new transnational practice in bankruptcy law is emerging whereby cryptocurrency exchanges compensate the injured users on a collective basis. This paper will argue: first, that this trend has transplanted into Asia and Europe the US idea according to which bankruptcy law can be employed to avoid mass litigation; secondly, that this trend has transcended the debate about the characterization of digital assets, including the concerns of those scholars who maintain that digital coins cannot be objects of property; and thirdly that – since this practice …

Grab The Fire Extinguisher Comparing Uk Schemes Of Arrangement To U.S. Corporate Bankruptcy After Jevic, David S. Stevenson

Cleveland State Law Review

Corporations overwhelmed with debt frequently turn to the courts for help to restructure their credit obligations, but some courts are more helpful than others. This is especially true when creditors cannot agree on a particular resolution, let alone when some creditors will not be paid at all. International corporations often have a choice of forum—and substantive insolvency law—based on their legal and physical presence in dozens or even hundreds of countries. The UK and U.S. offer different avenues for using insolvency law to restructure debts without total liquidation, and the American avenue has become more difficult to navigate thanks to …

In Whose Interests Should A Company Be Run? Fiduciary Duties Of Directors During Corporate Failure In India: Looking To The West For Answers, Gautam Sundaresh

Michigan Business & Entrepreneurial Law Review

This Comment looks at the debate as it has played out in the legal jurisprudence of the U.S. and the U.K. The analysis of each considers the three financial stages of a corporation’s existence that are specifically addressed in the debate today, i.e.: (i) solvency; (ii) insolvency; and (iii) the zone of insolvency. After setting out the current position, this Comment specifically addresses the various shortcomings and criticisms of the models adopted by each jurisdiction and offers observations on the status quo and the implementation of these models. On this basis, this Comment goes on to propose a model to …

The Dialogic Aspect Of Soft Law In International Insolvency: Discord, Digression, And Development, John A. E. Pottow

Michigan Journal of International Law

In this study, I describe three important articles in the IRJ model law and discuss their development, drawing in part upon my experience as a delegate to UNCITRAL Working Group V. In doing so, I want to situate these developments within the broader discussions of international law and international relations theory regarding soft law. Doing so will both vindicate and puzzle some of the conventional understanding of how soft law instruments tend to function, although some of the conclusions must necessarily be conjectural at this stage.

Fiduciary Principles In Bankruptcy And Insolvency, John A.E. Pottow

Book Chapters

This chapter examines fiduciary duties in bankruptcy and insolvency, focusing on the bankruptcy trustee’s duties, which are triggered by virtue of appointment in a case. It first provides a background on bankruptcy law in order to elucidate the doctrines and rules affecting fiduciary responsibilities in bankruptcy, citing a number of relevant provisions in the Bankruptcy Code. It then considers the fiduciary, non-fiduciary, and anti-fiduciary obligations of the trustee under the Bankruptcy Code before discussing the fiduciary duties of care and loyalty. In particular, it highlights bankruptcy-related issues raised by the duty of loyalty with respect to secured creditors, priority unsecured …

A Fresh View On The Hard/Soft Law Divide: Implications For International Insolvency Of Enterprise Groups, Irit Mevorach

Michigan Journal of International Law

It is the orthodox belief that treaties and—within the EU—directly applicable regulations represent hard, binding international law, while other international instruments—including model laws—are forms of soft law. In a previous publication(The Future of Cross-Border Insolvency: Overcoming Biases and Closing Gaps), I discussed how the traditional distinction between hard and soft law is less firm, due particularly to economic and behavioural implications of instrument choice and design. Building on that analysis, this Article focuses on the new rules for the international insolvency of enterprise groups in the Recast EU Insolvency Regulation 2015 (the “EIR”) and in the forthcoming UNCITRAL model law …

Flotsam, Financing And Flotation: Is Canada “Resolution Ready” For Insurance Company Insolvency?, Janis P. Sarra

All Faculty Publications

Insurance represents almost 2 per cent of Canada’s gross domestic product (GDP), yet there is little public policy discussion regarding the viability of the companies that insure Canadians or about the policyholder protection and resolution regime that underpins the provision of these services. As new products and technology develop, and as the complexity of multinational insurance enterprises increases, new risks pose challenges for Canada’s oversight and policyholder protection regimes. This article provides an overview of the insolvency regime for insurers in Canada, focusing primarily on the federal regime as the exemplar of how Canadian regulators and the insurance industry have …

The Ammanati Affair: Seven Centuries Old, And Not Feeling The Age, Eugenio Vaccari

Chicago-Kent Law Review

The enactments of the UNCITRAL Model Law on Cross-Border Insolvency and the European Regulations on insolvency proceedings have promoted an incremental approach towards substantive harmonization. This strategy has not remained unquestioned. One of the major criticisms is that such a course of actions overlooks the nature of the issues currently raised in multi-national and cross-disciplinary bankruptcy procedures.

This Article focuses on the Anglo/American bankruptcy tradition. It adopts a doctrinal methodology to question the conclusion that “collectivity” is and should be a procedural, objective, and secondary notion in light of two case studies. It suggests that in the context of cross-border, …