Bankruptcy Law Commons^™

The Texas Two-Step: How Corporate Debtors Manipulate Chapter 11 Reorganizations To Dance Around Mass Tort Liability, Laura S. Rossi

Emory Bankruptcy Developments Journal

The purpose of the bankruptcy system is to grant a “fresh start” to the honest but unfortunate debtor, while the purpose of the tort system is to make injured parties “whole” again. As a result, these systems inevitably clash when a business debtor files for bankruptcy while there are pending tort claims against it. The tension between these systems has reached a whole new level following the emergence of a new strategy deemed the “Texas Two-Step.”

A Texas statute leaves open a loophole for otherwise solvent companies to dodge mass tort liabilities and protect their assets, leaving injured plaintiffs with …

Section 727(A)(11) – Modest Proposals For Change, Laura B. Bartell

Law Faculty Research Publications

No abstract provided.

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.

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. In Bespoke Bankruptcy, Professor Laura N. Coordes has given me a gift: the gift of the right words to describe my tradition, and a theoretical framework to undergird it. As …

Introduction: A Tribute To Hon. David R. Jones, Adriano Omar Iqbal

Emory Bankruptcy Developments Journal

No abstract provided.

Reconceptualizing Bankruptcy Education Requirements For Incarcerated Debtors, Sydney Calas

Emory Bankruptcy Developments Journal

In the eighteen years since Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), bankruptcy scholars and professionals have launched countless critiques against two of the Act’s more drastic amendments: (1) mandatory pre-filing credit counseling and (2) a mandatory post-filing financial management course. Without completing the pre-filing requirement, one cannot qualify as a debtor under the Code and is thus barred from filing for bankruptcy. Without completing the post-filing requirement, one cannot receive a discharge. Notwithstanding the volume and breadth of valid criticisms, the specific harm of BAPCPA’s education requirements has been largely ignored for one population: incarcerated …

America’S Public Shell Trafficking Problem: Ripe For Reprocessing, Harrison Lipsky

Emory Bankruptcy Developments Journal

The scourge of public shell trafficking has led to fraudsters taking advantage of and pilfering the hard-earned dollars of the American investing public for decades. These fraudsters seek to abuse the chapter 11 bankruptcy process by discharging the debt of such public shells, so that they can increase the profitability of schemes that target innocent investors, such as reverse mergers and pump-and-dump schemes. Regulators and lawmakers alike have fought back against this phenomenon through statutory reform and targeted regulatory programs; recently, their principal method of fighting back has been to consistently object to chapter 11 plans of reorganization that could …

Standardizing And Unbundling The Sub Rosa Dip Loan, Kenneth Ayotte, Alex Zhicheng Huang

Emory Bankruptcy Developments Journal

In many recent chapter 11 cases, debtor-in-possession (“DIP”) loans determine reorganization plan payoffs at the outset of the case. Recent DIP loans are tied to plan terms including rights offerings, which give the DIP lender exclusive rights to purchase discounted equity in the reorganized company, and backstop fees, which pay the rights holder for committing to purchase them. Terms like these raise fears that DIP loan approval is being used to short circuit the chapter 11 reorganization plan process—in bankruptcy parlance, that the DIP loan is a sub rosa plan. How should bankruptcy law manage this sub rosa DIP loan …

Universal Forms Of Influence: Support For Women On Boards, Cindy A. Schipani, Paula J. Caproni

Seattle University Law Review

There are various efforts underway to increase gender diversity on corporate boards, including legislation in California, a recent SEC approved comply or explain rule for companies listed on the Nasdaq stock exchange, and efforts by institutional investors such as State Street and BlackRock to recognize the value diversity brings to corporate decisionmaking. Although some of these efforts are being contested in the courts, many companies have begun to comply with these initiatives.

This Article is organized as follows. Part I provides an overview of several efforts to increase gender diversity on boards along with numerous research studies showcasing the benefits …

“Statistics Are Human Beings With The Tears Wiped Away”: Utilizing Data To Develop Strategies To Reduce The Number Of Native Americans Who Go Missing, Lori Mcpherson, Sarah Blazucki

Seattle University Law Review

On New Year’s Eve night, 2019, sixteen-year-old Selena Shelley Faye Not Afraid attended a party in Billings, Montana, about fifty miles west of her home in Hardin, Montana, near the Crow Reservation. A junior at the local high school, she was active in her community. The party carried over until the next day, and she caught a ride back toward home with friends in a van the following afternoon. When the van stopped at an interstate rest stop, Selena got out but never made it back to the van. The friends reported her missing to the police and indicated they …

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 …

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 …

Nestlé V. Doe: A Death Knell To Corporate Human Rights Accountability?, Phillip Ayers

Seattle University Law Review

The Supreme Court in Nestlé v. Doe held that foreign plaintiffs who claimed to be victims of overseas tortious conduct by corporate defendants had no jurisdiction to sue in federal courts using the Alien Tort Statute. This Comment looks at the history of the Alien Tort Statute, from its inspiration, long dormancy, and recent reinvigoration beginning in the 1980s. The Comment then explores the background of Nestlé and its issues with child slavery in its cocoa supply chain. From there, the Comment analyzes the Nestlé v. Doe decision, and posits an alternative outcome. Finally, this Comment looks for a new …

Duped By Dope: The Sackler Family’S Attempt To Escape Opioid Liability And The Need To Close The Non-Debtor Release Loophole, Bryson T. Strachan

Law Student Publications

The opioid epidemic continues to rage on in the United States, ravaging its rural populations. One of its main causes? OxyContin. Purdue Pharma (“Purdue”), the maker of OxyContin, aggressively marketed opioids to the American public while racking up a fortune of over $13 billion dollars for its owners,3 the Sackler family. As a result, roughly 3,000 lawsuits were filed against Purdue and members of the Sackler family. Generally, the lawsuits alleged that Purdue and members of the Sackler family knew OxyContin was highly addictive yet aggressively marketed high dosages of the drug and misrepresented the drug as nonaddictive and without …

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 …

Presentation Remarks, Marvin Isgur

Emory Bankruptcy Developments Journal

No abstract provided.

The Fresh Start Paradox: Economic Disaster Relief Available To Title 11 Debtors, Kellsie Davis Ruane

Emory Bankruptcy Developments Journal

The Small Business Administration (“SBA”) has been providing disaster relief in the form of Economic Injury Disaster Loans (“EIDLs”) since its inception in 1953. In the context of the COVID-19 pandemic, the CARES Act charged the SBA with issuing forgivable loans through the Paycheck Protection Program (“PPP”) to small businesses which would otherwise face permanent closure. Though the CARES Act did not specifically grant the SBA authority to do so, the SBA interpreted its powers to include the ability to set requirements for loan approval which were not laid out in the Act itself. Specifically, the SBA promulgated a rule …

“Engaged In”: The Rocky Marriage Between Commercial And Business Activity And Subchapter V Eligibility, Blake Clevenger

Emory Bankruptcy Developments Journal

The Small Business Reorganization Act of 2019, which created subchapter V bankruptcy relief for eligible small business debtors, is a step towards a small-business-friendly bankruptcy environment. The legislative history of subchapter V stated the goal of this new statute was to provide a cost-effective and streamlined path to reorganization to allow financially distressed small businesses to remain in business. To be eligible for subchapter V relief, a debtor must, among other requirements, be “engaged in commercial or business activities.” However, courts have continuously disagreed on the meaning of “engaged in commercial or business activities.” Courts have …

Fake And Real People In Bankruptcy, Melissa B. Jacoby

Emory Bankruptcy Developments Journal

This essay explores the bankruptcy system’s structural bias in favor of artificial persons—for-profit companies, non-profit enterprises, and municipalities given independent life by law—relative to humans. The favorable treatment extends to foundational issues such as the scope and timing of debt relief, the conditions to receiving any bankruptcy protections, and the flexibility to depart from the Bankruptcy Code by asserting that doing so will maximize economic value. The system’s bias also contributes to the “bad-apple-ing” of serious policy problems, running counter to other areas of law that have deemed harms like discrimination to be larger institutional phenomena rather than merely the …

Corporate Governance And Gender Equality: A Study Of Comply-Or-Explain Disclosure Regulation, Aaron A. Dhir, Sarah Kaplan, Maria Arabella Robles

Seattle University Law Review

In 2020, the Nasdaq Stock Market filed a proposal with the U.S. Securities and Exchange Commission seeking permission to adopt a board diversity-related disclosure requirement for its listed companies. In 2021, the SEC approved the proposal, thus entrenching Nasdaq’s position as the most significant stock exchange to date to mandate listing rules that reflect the intention of diversifying corporate boardrooms. Nasdaq’s movement into the diversity space is not the first attempt to address homogeneous boards in the U.S. In 2009, the SEC adopted a rule requiring publicly traded firms to report on whether they consider diversity in identifying director nominees. …