Bankruptcy Law Commons^™

Consider This: Make-Whole Premiums As Unmatured Interest, Kathryn G. Berman

Fordham Law Review

Make-whole premiums have become mainstream in corporate bond indentures because of the protections they provide to lenders. Although they are generally enforceable as a matter of contract law, make-whole premiums have been treated inconsistently in bankruptcy courts in several areas. One point of inconsistency is whether make-whole premiums are treated as liquidated damages or unmatured interest. Such a determination has significant implications on the allowance of the claim and its recovery from an insolvent debtor.

Most bankruptcy courts have treated make-whole premiums as liquidated damages and allowed their recovery in creditors’ claims. In doing so, their analyses have treated liquidated …

Discharging Government Debt, Nicole Langston

Vanderbilt Law Review

The bankruptcy system tries to strike a balance between a fresh economic start through debt forgiveness, or discharge, and the need to repay creditors. When the debt is owed to the government, however, the scale seemingly tips toward repayment because of the government’s role in providing essential services to society. But there are certain debts owed to the government that can be forgiven in bankruptcy and some that cannot. The consumer bankruptcy system does not forgive government-owed child support debt, penal debt, and student loan debt, which are disproportionally carried by poor women and racial minorities, but the system does …

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 Credit Markets Go Dark, Jared A. Ellias, Elisabeth De Fontenay

Faculty Scholarship

Over the past generation, conflicting trends have reshaped the ownership of corporate equity on the one hand and corporate debt on the other. In equity, the two great trends have been the shift from public markets to private ownership and the consolidation of American companies’ stock in the hands of powerful investment funds. In debt, by contrast, the great trends have been a shift from private loans to quasi-public markets and dispersed ownership.

In this Article, we chronicle the recent and dramatic reversal of these trends in the debt markets. Private investment funds executing a “private credit” strategy have become …

Bankruptcy Appeal Barriers, Jonathan M. Seymour

Faculty Scholarship

Appeals in bankruptcy do not look like appeals elsewhere in the federal court system. In particular, bankruptcy appeal barriers are strikingly distinctive. These barriers serve outright to block an appeal from being decided. An appellate court may dismiss an appeal, rather than consider the merits, if facts on the ground have changed so much since the original decision that providing a remedy to an appellant, even if victorious, would not be prudent. Take ongoing litigation in the Boy Scouts bankruptcy case. A plan of reorganization was confirmed fixing the entitlements of victims to compensation. Dissenting creditors argued bitterly the plan …

Strategies For Unsecured Creditors To Mitigate The Pro-Debtor Policies Of Subchapter V And Suggestions For Changes To The Bankruptcy Code, Micah Mays

Oklahoma Law Review

No abstract provided.

Seizing Welfare From The Bankrupt, Michael D. Sousa

University of Cincinnati Law Review

The earned income tax credit (EITC) is currently the largest means-tested antipoverty program in the United States that assists low-income working families surviving along the edges of poverty. A central component of the national welfare system, the EITC has lifted millions of families with children out of poverty and has produced myriad benefits for their everyday lives. But most of the poor and near-poor endure in the low-wage labor market and often lead turbulent financial lives, plagued by precarious employment along with deleterious material and psychological constraints in budgeting for daily expenses. For the segment of these families also burdened …

The 2023 Banking Turmoil: Lessons For Eu Resolution Authorities, Niccolò Cirillo, Francesco Pennesi, Sebastiano Laviola

Journal of Financial Crises

The March 2023 banking turmoil in the United States and Switzerland marked the most significant banking stress in financial markets since the 2007–2009 Global Financial Crisis, prompting a reevaluation of prudential and resolution frameworks. This paper explores whether the 2023 events offer preliminary lessons for resolution authorities within the European Union (EU).

Policymakers often struggle to restore confidence in financial systems and contain the repercussions of financial instability. While the 2023 crises in the US and Switzerland underscored this difficulty, authorities largely managed to mitigate the most severe consequences. Nonetheless, some issues in bank crisis management were identified. This paper …

Beyond The Equity Power Of Bankruptcy Courts: Toxic Tort Liabilities In Chapter 11 Cases, Kaighn Smith

Maine Law Review

In 1982, three asbestos product manufacturers filed voluntary petitions for business reorganization under Chapter 11 of the United States Bankruptcy Code. The common reason for each of these filings was that tort liabilities threatened the financial survival of the corporation. Never, in the history of United States bankruptcy law, had any business sought bankruptcy relief for such a reason. By 1985, two more firms, another asbestos product manufacturer and a pharmaceutical company, filed Chapter 11 petitions for the same reason. The torts of these "debtors" in bankruptcy are similar; they extend from the manufacture and wide-spread marketing of products that …

The Waiver Problem In Maine Real Property Foreclosure Law: A Commercial Paper Perspective, Dennis M. Patterson

Maine Law Review

When a mortgagee accepts from a mortgagor payment of part of a mortgage arrearage, does the mortgagee then waive its right to foreclose? Many bank counsel will say that the mortgagee does waive its right to foreclose, and they will point for authority to the broad holding of Savings & Loan Association of Bangor v. Tear. In that decision, the Maine Supreme Judicial Court, sitting as the Law Court, seemed to hold that a mortgagee waives its right to foreclose if it accepts tender of a late payment. This broad interpretation of the Savings & Loan decision has proven to …

Loosen Up: The Follies Of Strict Construction As Applied To A Statutory Tribal Sovereign Immunity Waiver, Joseph M. Raimondi

St. John's Law Review

(Excerpt)

On February 9, 2020, Brian Coughlin attempted suicide, leading to an eleven-day stint at the hospital. He was experiencing “overwhelming stress, anxiety and lack of hope for a better life.” He had recently filed for bankruptcy, which normally triggers a stay that prevents creditors from engaging in “any act to collect, assess, or recover a claim against the debtor . . . .” However, one of Coughlin’s creditors, associated with a Native American tribe —the Lac Du Flambeau Band of Lake Superior Chippewa Indians (“the Band”)—believed that it did not have to comply with the stay by virtue of …

Crypto Failure In The Shadows, Kara J. Bruce

Villanova Law Review (1956 - )

No abstract provided.

The Constitutional Meaning Of Financial Terms, Tomer Stein, Shelby Ponton

Utah Law Review

The Constitution has sixty-three financial terms. These financial terms include, for instance, “compensation,” “expenditures,” “debt,” “coin,” “revenue,” “securities,” and “bankruptcies”—all of which determine the elementary building blocks of our governmental makeup. When the Supreme Court interprets the meaning of these financial terms, it does so in isolation and without a consistent framework. This Article proposes a unified framework for the interpretation of financial terms in the Constitution which comprises two fundamental canons of construction.

First, this Article proposes that all financial terms in the Constitution should be interpreted with fiscal and monetary neutrality—interpreting financial terms in a way that does …

Untangling Bankruptcy’S Most Complex Web: Chapter 11 Rule 1111(B) And Subchapter V, Evan Sponder

Brooklyn Journal of Corporate, Financial & Commercial Law

The United States Code Section 1111(b) provides an equitable remedy to debt restructuring for both debtors and creditors in Chapter 11 bankruptcy by allowing the debtor to retain their income-producing assets and repay their creditor(s) through a mutually approved plan. However, section 1111(b) is difficult for courts to apply due to its complex nature, and infrequent application of the section has resulted in limited development of case law interpreting the section. Courts currently interpret 1111(b) elections in Chapter 11 Subchapter V cases to exclude interest accrual; this interpretation establishes an inequitable precedent whereby debtors’ procedural advantages bypass creditor protections during …

The Supreme Court Sack[Ler]S Third-Party Releases In Chapter 11: Should Congress Seize The Cudgel?, Lawrence Ponoroff

William & Mary Law Review Online

On June 27, 2024, the Supreme Court issued its ruling in Harrington v. Purdue Pharma L.P., holding that nonconsensual third-party releases included in a Chapter 11 plan of reorganization, other than one relating to asbestos liability claims, were impermissible under the federal Bankruptcy Code. The releases at issue would have immunized members of the Sackler family, who controlled Purdue Pharma, from liability in connection with the company’s role in the opioid crisis. The Sacklers represent the epitome of the unpopular litigant, so no tears need be shed for them. In a sense, they just received a dose of their …

Reimagining Bankruptcy For Cryptocurrency Platforms: Frameworks To Protect Cryptocurrency Investors, Natalia Plichta

Chicago-Kent Law Review

No abstract provided.

When The Bank Wants Its Borrower In Bankruptcy: Benefits Of Bankruptcy For Lenders And Lender Liability Defendants, David C. Hillman, Matthew L. Caras

Maine Law Review

Bankruptcy features such as the automatic stay and the avoidance powers have traditionally caused lenders to look with disfavor upon the commencement by a borrower of a case under the Bankruptcy Code and have caused lenders to consider only as a last resort the alternative of exercising their right to commence an involuntary bankruptcy against a borrower. Yet circumstances exist where lenders might obtain substantial benefits and advantages from dealing with a problem loan in the context of a borrower's bankruptcy case, particularly in light of the increasing number of lender liability lawsuits that have been initiated during the past …

Maine Debtor-Creditor Law By Dennis M. Patterson, David J. Jones

Maine Law Review

Dennis M. Patterson, Esquire, has written a brief, practical guide to selected areas of collection practice entitled Maine Debtor-Creditor Law. Two immediate observations come to mind: first, that I plan to keep a copy of the book in my office library for future reference; second, that I am disappointed that the author omitted reference to several challenging issues that confront the attorney having a regular collection or foreclosure practice. This latter observation is both an indication of the usefulness of the book's treatment of the areas covered and a hopeful invitation to the author to expand on his subject matter …

A Reply To David Jones, Dennis M. Patterson

Maine Law Review

During my years of practice in Maine, I had the pleasure of litigating most of the issues discussed in my book, Maine Debtor-Creditor Law, with many members of Maine's fine commercial and bankruptcy law bar. Among the lawyers with whom I litigated these questions is David Jones. In fact, one of the cases we litigated, a particularly thorny foreclosure action, was the impetus of an article that became portions of two of the chapters in my book. It is against this background that I was pleased to learn that one of my old adversaries from practice had agreed to review …