Bankruptcy Law Commons^™

Bankruptcy's Cathedral: Property Rules, Liability Rules, And Distress, Vincent S.J. Buccola

Northwestern University Law Review

What justifies corporate bankruptcy law in the modern economy? For forty years, economically oriented theorists have rationalized bankruptcy as an antidote to potential coordination failures associated with a company’s financial distress. But the sophistication of financial contracting and the depth of capital markets today threaten the practical plausibility, if not the theoretical soundness, of the conventional model. This Article sets out a framework for assessing bankruptcy law that accounts for changes in the technology of corporate finance. It then applies the framework to three important artifacts of contemporary American bankruptcy practice, pointing toward a radically streamlined vision of the field. …

Cacs And Doorknobs, Anna Gelpern, Jeromin Zettelmeyer

Georgetown Law Faculty Publications and Other Works

In response to debt crises, policy makers often feature Collective Action Clauses (CACs) in sovereign bonds among the pillars of international financial architecture. However, the content of official pronouncements about CACs suggests that CACs are more like doorknobs: a process tool with limited impact on the incidence or ultimate outcome of a debt restructuring. We ask whether CACs are welfare improving and, if so, whether they are pillars or doorknobs. The history of CACs in corporate debt suggests that CACs can be good, bad or unimportant depending on their vulnerability to abuse and the available alternatives, including bankruptcy and debt …

Shadow, Light And Darkness: Bankruptcy's Business In-Fact And Business In-Law Justification Test Under Sec. 363(B), Kenneth D. Ferguson

Faculty Works

In this article, Professor Ferguson addresses the problem of business debtors who avoid the reorganization process of Chapter 11 bankruptcy by instead selling their business under Bankruptcy Code § 363. There is concern that the sales are not producing the best and highest values. Professor Ferguson proposes a two part business in-fact and business in-law process that he believes will produce fairer and more optimal results.

Mere Conduit, David G. Carlson

Articles

"Mere conduit" is a legal fiction in fraudulent transfer and other avoidance cases. This article argues that the legal fiction is misleading, unnecessary and rendered obsolete by the Supreme Court's recent opinion in Merit Management Group v. FTI Consulting, Inc. (2018). The article further contends that a huge majority of leading cases confound fraudulent transfer law with the law of corporate theft. This error leads to depriving financial intermediaries of their opportunity to avoid liability on the ground of being bona fide transferees for value. Finally, courts often mistake banks as initial transferees of fraudulent transfers (absolutely liable in spite …

Bankruptcy’S Class Act: Class Proofs Of Claim In Chapter 11, Tori Remington

Dickinson Law Review (2017-Present)

When a business files for protection under Chapter 11 bankruptcy, it must begin to pay off its debt by reorganizing or liquidating its assets. Oftentimes, both processes include terminating employees to reduce the business’s expenditures. As a result of these terminations, former employees might file a “class proof of claim” against the business to preserve any claims of unpaid wages or violations of federal law.

Whether a group may file a class proof of claim against a debtor in bankruptcy remains unclear. The Tenth Circuit has rejected the class proof of claim in bankruptcy. The remaining circuit courts that have …

Third-Party Bankruptcy Releases: An Analysis Of Consent Through The Lenses Of Due Process And Contract Law, Dorothy Coco

Fordham Law Review

Bankruptcy courts disagree on the use of third-party releases in Chapter 11 bankruptcy plans, the different factors that circuit courts consider when deciding whether to approve a third-party release, and the impact of the various consent definitions on whether a release is or should be binding on the creditor. Affirmative consent, “deemed consent,” and silence are important elements in this discussion. Both contract law and due process provide lenses to evaluate consent definitions to determine whether nondebtor third-party releases should bind certain creditor groups. This Note proposes a solution that follows an affirmative consent approach to protect against due process …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

No abstract provided.

Voluntary Petition For Non-Individuals Filing For Bankruptcy

Catholic Dioceses in Bankruptcy

No abstract provided.

Incorporating The Fresh Start Into Sovereign Debt Restructuring Through Odious Debt, Matthew B. Masaro

Cornell Law Review

No abstract provided.

Sfr Inv.’S Pool 1, Llc V. U.S. Bank Nat’L Ass’N, 135 Nev. Adv. Op. 45 (Sept. 26, 2019), Brittni Tanenbaum

Nevada Supreme Court Summaries

When a court grants retroactive annulment for an automatic bankruptcy stay on a property, a sale of the property during the stay will not be set aside, unless it can be shown that fraud, oppression, or unfairness occurred during the sales process.

Deconstructing Simple Evidence In Bankruptcy Petition For Legal Certainty, M. Hadi Shubhan

Indonesia Law Review

This study analyzed the theories, norms, and practice of simple evidence (pembuktian sederhana) which have become the requirements for bankruptcy petition applications. The evidence applied in the procedure law of the bankruptcy petition and the Suspension of Debt Repayment Obligation or PKPU was simple evidence. The existence of the simple evidence requirement actually caused the bankruptcy petition to have a complication and legal uncertainty. Therefore, the norm of simple evidence needs to be reconstructed. The aspects that have fulfilled simple evidence in the bankruptcy petition or PKPU application included two (2) bankruptcy requirements, namely, unpaid debt that has matured and …

Jpmorgan Chase London Whale A: Risky Business, Arwin G. Zeissler, Daisuke Ikeda, Andrew Metrick

Journal of Financial Crises

In December 2011, the Chief Executive Officer and Chief Financial Officer of JPMorgan Chase (JPM) instructed the bank’s Chief Investment Office to reduce the size of its Synthetic Credit Portfolio (SCP) during 2012, so that JPM could decrease its RiskWeighted Assets as the bank prepared to adopt the impending Basel III bank capital regulations. However, the SCP traders were also told to minimize the trading costs incurred to reduce Risk-Weighted Assets, while still maintaining the opportunity to profit from unexpected corporate bankruptcies. In an attempt to balance these competing objectives, head SCP derivatives trader Bruno Iksil suggested in January 2012 …

Do Payday Loans Cause Bankruptcy?, Paige M. Skiba, Jeremy Tobacman

Vanderbilt Law School Faculty Publications

An estimated ten million American households borrow on payday loans each year. Despite the prevalence of these loans, little is known about the effects of access to this form of short-term, high-cost credit. We match individual-level administrative records on payday borrowing to public records on personal bankruptcy, and we exploit a regression discontinuity to estimate the causal impact of access to payday loans on bankruptcy filings. Though the size of the typical payday loan is only $300, we find that loan approval for first-time applicants increases the two-year Chapter 13 bankruptcy filing rate by 2.48 percentage points. There appear to …

Moving Beyond Medical Debt, Brook E. Gotberg, Michael D. Sousa

Faculty Publications

In recent years it has become clear that medical costs are imposing severe financial burdens on American families, sometimes to the point that bankruptcy becomes the only escape from crippling debt. When evaluating the well-established connection between outstanding medical debt and consumer bankruptcy, most existing empirical studies attempt to quantify the percentage of consumer bankruptcies that are "caused" by unmanageable medical indebtedness. This Article addresses what we believe to be a more significant line of empirical inquiry, namely, the connection between health insurance coverage and consumer bankruptcy as a more precise measurement of how national health insurance programs may or …

Relational Preferences In Chapter 11 Proceedings, Brook E. Gotberg

Faculty Publications

It is no secret that creditors hate so-called "preference" actions, which permit a debtor to recover payments made to creditors on the eve of bankruptcy for the benefit of the estate. Nominally, preference actions are intended to equalize the extent to which each unsecured creditor must bear the loss of a bankruptcy discharge, or to discourage creditors from rushing to collect from the debtor in such a way that will push an insolvent debtor into bankruptcy. But empirical evidence strongly suggests that, at least in chapter 11 reorganization proceedings, preference actions do not fulfill either of these stated goals. Interviews …

Eksistensi Lembaga Pengawasan Pengelolaan Keuangan Negara, Adam Setiawan

Jurnal Hukum & Pembangunan

Supervision of state finance management conducted by related institutions such as BPKP, DPR / DPRD, BPK and KPK aims to implement the principles of the management of state finances accordingly and in accordance with the objectives of state financial management that is to guarantee the state in order to create welfare, the right of society and finance the service to the community.

Predicting Chapter 11 Bankruptcy Case Outcomes Using The Federal Judicial Center Idb And Ensemble Artificial Intelligence, Warren E. Agin, Gill Eapen

Georgia State University Law Review

In this project, the authors obtained public data on over 100,000 Chapter 11 bankruptcy cases and used machine and deep-learning methodologies to explore whether models could be designed to predict Chapter 11 case outcomes. The data used was obtained from the Federal Judicial Center’s bankruptcy Integrated Database and included information about case filing dates, the court where the case was filed, the type of business entity, and basic information about assets and liabilities. Using this information, the authors initially sought to predict whether a particular case was dismissed, converted to another Chapter under the Bankruptcy Code, or closed with a …

Civil Rico: An Effective Deterrent To Fraudulent Asbestos Litigation?, Lester Brickman

Cardozo Law Review

In January 2014, U.S. Bankruptcy Judge George Hodges, presiding over the asbestos-related bankruptcy of Garlock Sealing Technologies, LLC, a manufacturer of gaskets containing asbestos, issued an order estimating Garlock's liability for pending and future mesothelioma cases. Judge Hodges, after hearing evidence discovered by Garlock in a sampling of settled cases, rejected using the usual bankruptcy court recourse to the debtor's historic settlement values as a valid basis for estimating Garlock's total future liability for asbestos-related injuries. He found that Garlock's prior mesothelioma settlements were not a reliable predictor of Garlock's liability because those settlements had been infected by misrepresentations by …

Sec V. Creditors: Why Sec Civil Enforcement Practice Demonstrates The Need For A Reprioritization Of Securities Fraud Claims In Bankruptcy, Sean Kelly

St. John's Law Review

(Excerpt)

This Note examines how this tension has motivated the SEC to use receiverships as a preferred vehicle to maximize recovery for defrauded security holders and, in the process, create what amounts to an SEC-run bankruptcy proceeding. The use of these receiverships has triggered a high-stakes race to the courthouse among the SEC and creditors, where mere hours can be the difference between millions in recovery and nothing at all. To end this costly race, this Note proposes a solution that seeks to harmonize securities fraud enforcement with bankruptcy law, which starts with revisiting Bankruptcy Code § 510(b) to reprioritize …

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 …