Bankruptcy Law Commons^™

Contagion. Ftx, A Sector's Crisis & Crypto's Silent Victims, Lev E. Breydo

Faculty Publications

Late 2022 was crypto’s Minsky moment, characterized by wholesale sector collapse and over a dozen major bankruptcies, including FTX’s implosion. For millions of investors, it was the worst of all worlds, combining the frenetic contagion of 2008 with consumer protections most reminiscent of the Panic of 1907.

While the industry’s challenges are often attributed to the nature of crypto itself, the true root cause reflects a fundamental category error. This Article’s comprehensive market taxonomy identifies as the sector’s nexus of risk entities it terms “Crypto Platforms,” like FTX. Crypto Platforms are essentially financial institutions – a cauldron of externalities subject …

Collusive Foreclosure Sales: The Forgotten Legacy Of Northern Pacific V. Boyd, David G. Carlson

Articles

In BFP v. Resolution Trust Corp. (1994), the Supreme Court ruled that mortgage foreclosures could not be fraudulent conveyances – unless the foreclosure was “collusive.” It gave no clue what made mortgage foreclosures collusive. But in 1913, the Supreme Court defined collusive mortgage foreclosures in a famous railroad receivership case – Northern Pacific R. Co. v. Boyd. Boyd is usually thought to be the origin of the absolute priority rule in bankruptcy reorganization. Actually, it was a mortgage foreclosure sale. What made the sale collusive is that some of the shareholders of the defaulting railroad were also the shareholders of …

The Mismatched Goals Of Bankruptcy And Mass Tort Litigation, Maureen Carroll

Reviews

By the end of this Term, SCOTUS must decide what to do about the mammoth Purdue Pharma bankruptcy settlement. If allowed to go forward, the $10 billion deal will not only resolve claims against the company, it will shield the Sackler family—the company’s former owners—from any further liability for their role in the opioid crisis. The deal has generated a great deal of discussion, much of it focused on the legality and wisdom of that third-party release. The authors of Against Bankruptcy take a broader view, asking a set of critical questions about the proper role of bankruptcy in the …

In The Midst Of Bankruptcy: How Cryptocurrency's Classification Affects Creditors Who Were Once Customers, Mia Qu

Washington Law Review

In 2022, Congress proposed the Digital Commodities Consumer Protection Act to amend the Commodity Exchange Act and define a new type of commodity: digital commodity. The definition of digital commodity encompasses cryptocurrency and provides the Commodity Futures Trading Commission with jurisdiction over digital asset transactions. This definition of digital commodity has two important implications. First, it signals the lawmakers’ tendency to generalize cryptocurrency as a commodity. Second, it brings complications into how creditors—especially individual crypto account holders—can recover in the recent bankruptcy cases involving prominent crypto companies. This Comment contains four components. First, it provides a brief explanation of cryptocurrency …

Cross Border Restructuring And Bankruptcy Litigation Ft. Kobre & Kim Llp, Cardozo International Law Society (Cils)

2023–2024 Flyers

No abstract provided.

Against Bankruptcy: Public Litigation Values Versus The Endless Quest For Global Peace In Mass Litigation, Abbe Gluck, Elizabeth Chamblee Burch, Adam Zimmerman

Scholarly Works

Can bankruptcy court solve a public health crisis? Should the goal of “global peace” in complex lawsuits trump traditional litigation values in a system grounded in public participation and jurisdictional redundancy? How much leeway do courts have to innovate civil procedure?

These questions have finally reached the Supreme Court in Harrington v. Purdue Pharma L.P., the $6 billion bankruptcy that purports to achieve global resolution of all current and future opioids suits against the company and its former family owners, the Sacklers. The case provides a critical opportunity to reflect on what is lost when parties in mass torts find …

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

Cardozo Law Review

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 …

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 …

The Market For Bankruptcy Courts: A Case For Regulation, Not Obliteration, Brook E. Gotberg

BYU Law Review

Large corporate debtors typically file for bankruptcy only after conducting a thorough analysis as to the most favorable venue for the case. Recent legislation has proposed to severely limit all corporate debtors’ ability to select bankruptcy venue. The messaging behind calls for venue reform is outwardly altruistic: it is said to be necessary to facilitate access to justice and to prevent abuse of the system. However, the push for venue reform is largely driven by professional envy and a distrust of specific judges based on unpopular high-profile rulings. Placing new constraints on the ability to choose venue will not achieve …

Ownership Of Social Media Accounts In Bankruptcy Cases, Garrity Kuester

Bankruptcy Research Library

(Excerpt)

Section 541(a) of title 11 of the United States Code (the "Bankruptcy Code") defines "property of the estate" broadly to include "all legal or equitable interests of the debtor in property as of the commencement of the [bankruptcy] case." Congress did not identify social media accounts as property of the estate under section 541(a)(1) of the Bankruptcy Code. Bankruptcy courts have generally concluded that business social media accounts constitute property interests. As such, these accounts often fall under the purview of the bankruptcy estate.

This memorandum discusses the courts’ analysis of the classification and ownership of social media accounts …

Claims Agents’ Duties And Rights To Compensation May Be Restricted, Giuseppina Mammoliti

Bankruptcy Research Library

(Excerpt)

In large chapter 11 cases, the number of creditors or claimants may exceed two hundred. Under the Federal Rules of Bankruptcy Procedure, creditors are entitled to notice. It is the role of the Clerk of Court to manage claims and provide notice to creditors. However, due to the notice requirement’s twenty-one-day deadline, it may become burdensome on the Clerk of Court to process claims and provide notice in a timely manner. Therefore, in these large chapter 11 cases, a Claims and Noticing Agent ("Claims Agent") is retained to relieve the clerk of court from claims-management work.

Claims Agents are …

Chapter 5 Avoidance Actions Can Be Sold As Property Of The Estate, Enrica Brook

Bankruptcy Research Library

(Excerpt)

Many courts, including the Fifth, Seventh and Ninth Circuits, have found that avoidance actions, under Chapter 5 of the Bankruptcy Code, are property of the estate. Section 541(a)(1) of the Bankruptcy Code defines property of the estate as "all legal or equitable interests of the debtor in property as of the commencement of the case," and section 541(a)(7) states that "[a]ny interest in property that the estate acquires after the commencement of the case" is estate property. The Supreme Court has interpreted the definition of "property of the estate" broadly, finding section 541(a)(1) can be read "to include in …

Equity For Intermediaries: The Resolution Of Financial Firms In Bankruptcy And Bank Resolution, Edward Janger

Faculty Scholarship

No abstract provided.

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

Scholarly Works

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, comprising of 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 …

Corporate Insider Status As A Badge Of Fraud Under 11 U.S.C. § 548, Aria Lugo

Bankruptcy Research Library

(Excerpt)

Section 101(31)(B)(i) - (vi) of title 11 of the United States Code (the "Bankruptcy Code") outlines a number of parties who are considered corporate insiders. Additionally, courts have identified a class of "non-statutory" insiders, who fall outside of the parties defined in section 101 but are still considered insiders in the context of corporate bankruptcy. In a corporate bankruptcy, who is an insider, and what are the implications of being an insider with respect to fraudulent transfer claims?

This memorandum explores insider liability under chapter 11 of title 11 of the United States Code. Part I identifies the parties …

The Continuing Problem Of Continuing Concealment – Ignoring The Language And Policy Of § 727(A)(2)(A), Laura B. Bartell

Law Faculty Research Publications

No abstract provided.

Henderson And The Objective Observer Standard: The Future Of Race-Conscious Standards Post-Students For Fair Admissions, Gabriela Dionisio

Seattle University Law Review

On June 29, 2023, the Supreme Court of the United States decided Students for Fair Admissions v. President & Fellows of Harvard College, which struck down race-conscious admissions policies. Within just a year after its ruling, Students for Fair Admissions has already had a sweeping impact, reaching beyond higher education. Although the Supreme Court did not indicate whether Students for Fair Admissions applies to sectors beyond higher education, law firms, and other employers have already modified their diversity policies and initiatives, erasing race and company diversity considerations. Given those dramatic changes, there is growing fear that Students for Fair Admissions …

Same Crime, Different Time: Sentencing Disparities In The Deep South & A Path Forward Under The Fourteenth Amendment, Hailey M. Donovan

Seattle University Law Review

The United States has the highest incarceration rate of any country in the world. The American obsession with crime and punishment can be tracked over the last half-century, as the nation’s incarceration rate has risen astronomically. Since 1970, the number of incarcerated people in the United States has increased more than sevenfold to over 2.3 million, outpacing both crime and population growth considerably. While the rise itself is undoubtedly bleak, a more troubling truth lies just below the surface. Not all states contribute equally to American mass incarceration. Rather, states have vastly different incarceration rates. Unlike at the federal level, …

Public Primacy In Corporate Law, Dorothy S. Lund

Seattle University Law Review

This Article explores the malleability of agency theory by showing that it could be used to justify a “public primacy” standard for corporate law that would direct fiduciaries to promote the value of the corporation for the benefit of the public. Employing agency theory to describe the relationship between corporate management and the broader public sheds light on aspects of firm behavior, as well as the nature of state contracting with corporations. It also provides a lodestar for a possible future evolution of corporate law and governance: minimize the agency costs created by the divergence of interests between management and …

Robo-Voting: Does Delegated Proxy Voting Pose A Challenge For Shareholder Democracy?, John Matsusaka, Chong Shu

Seattle University Law Review

Robo-voting is the practice by an investment fund of mechanically voting in corporate elections according to the advice of its proxy advisor— in effect fully delegating its voting decision to its advisor. We examined over 65 million votes cast during the period 2008–2021 by 14,582 mutual funds to describe and quantify the prevalence of robo-voting. Overall, 33% of mutual funds robo-voted in 2021: 22% with ISS, 4% with Glass Lewis, and six percent with the recommendations of the issuer’s management. The fraction of funds that robo-voted increased until around 2013 and then stabilized at the current level. Despite the sizable …