Bankruptcy Law Commons^™

A Trustee Generally May Not Recover An Actual Fraudulent Transfer If The Funds Have Been Reimbursed To The Debtor Pre-Petition, Carina Zupa

Bankruptcy Research Library

(Excerpt)

Section 544 of title 11 of the United States Code (the “Bankruptcy Code”) grants a trustee the power to “avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by” certain classes of secured creditors, unsecured creditors, and bona fide purchasers. When seeking to avoid a transfer a trustee can look to various other provisions of the Bankruptcy Code, including: 11 U.S.C. § 545 (statutory liens), 11 U.S.C. § 547 (preferences), 11 U.S.C. § 548 (fraudulent transfers), 11 U.S.C. § 549 (post-petition transactions), 11 U.S.C. § 553(b) (impermissible setoffs), and 11 …

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 …

Beyond Bankruptcy: Resolution As A Macroprudential Regulatory Tool, Steven L. Schwarcz

Notre Dame Law Review

Postcrisis efforts to extend bankruptcy-resolution techniques to protect the stability of the financial system have been insufficient, in part because regulators have been conflating bankruptcy’s traditional goals of resolving troubled firms individually with the need to resolve critical elements of the financial system to ensure its continued operation as a “system.” This requires resolving troubled firms collectively, as well as resolving securities-trading markets and the infrastructure that serves to facilitate that trading. The Article examines how to design that regulation, differentiating three approaches: reactive regulation, which comprises variations on traditional bankruptcy; proactive regulation, which consists of preplanned enhancements that are …

Exploring The Scope Of The Property Requirement Of Section 109(A) In Chapter 11 And 15 Cases, Rasha El Mouatassim Bih

Bankruptcy Research Library

(Excerpt)

Section 109 of title 11 of the United States Code (the “Bankruptcy Code”) provides that “only a person that resides or has a domicile, a place of business, or property in the United States . . . may be a debtor.” In In re Barnet, the United States Court of Appeals for the Second Circuit held that debtor eligibility requirements of section 109 apply to a debtor in recognition proceedings under chapter 15. If a debtor does not have a domicile or place of business in the United States, as is often the case with foreign debtors, then …

Selling A Vessel Free And Clear Of A Maritime Lien Pursuant To Section 363 Of The Bankruptcy Code, Aram Movaseghi

Bankruptcy Research Library

(Excerpt)

Under title 11 of the United States Code (the “Bankruptcy Code”), a debtor in possession or trustee may sell property of the debtor’s estate. However, a lien on a maritime vessel may make such a sale challenging, in particular because of jurisdictional issues. When a debtor’s assets become subject to the jurisdiction of both admiralty and bankruptcy cases, a complex conundrum arises. Maritime bankruptcies have generated complex legal issues and jurisdictional conflicts that have perplexed practitioners and implicated significant constitutional issues.

Under section 363 of the Bankruptcy Code, a debtor or trustee may seek authority from the court to …

Court’S Ability To Modify Or Terminate A Prior Recognition Order Under §1517(D) Of The Bankruptcy Code, Kristopher Peters

Bankruptcy Research Library

(Excerpt)

Chapter 15 of title 11 of the United States Code (the “Bankruptcy Code”) governs the process for obtaining recognition of foreign insolvency proceedings in the U.S. Section 1517 governs recognition of foreign proceedings and addresses two distinct, but related, issues: (1) whether a court must recognize a foreign court’s foreign proceeding; and (2) whether a court may modify or terminate a prior recognition of a foreign proceeding. This memorandum analyzes the second issue, which is governed by §1517(d) of the Bankruptcy Code.

This memorandum first examines the scope of §1517(d) and whether and when a court may modify or …

The Creditors' Bargain Reconstituted: Comments On Barry Adler's The Creditors' Bargain Revisited, Edward J. Janger

Faculty Scholarship

No abstract provided.

Moving Beyond Medical Debt, 27 American Bankruptcy Institute Law Review 93 (2019) (Co-Authored With Brook E. Gotberg), Brook Gotberg

Sturm College of Law: Faculty Scholarship

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 …

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 …

Constructive Trusts And Fraudulent Transfers: When Worlds Collide, David G. Carlson

Articles

When Ponzi schemes collapse and enter into bankruptcy liquidation, bankruptcy trustees assume that conveyances made by the debtor for no consideration are fraudulent conveyances. This Article argues that they are not. Virtually all the assets held by a Ponzi scheme are held in constructive trust for the victims of the fraud. If victims of the fraud can trace the proceeds of their investments into property transferred to a third party, the third party holds the asset transferred in trust for the relevant victim. When a bankruptcy trustee characterizes the asset as a fraudulently conveyed asset, the trustee expropriates the asset …

Three Against Two: On The Difference Between Property And Contract And The Example Of Deposit Accounts In Bankruptcy, Jeanne L. Schroeder, David G. Carlson

Articles

In Citizen's Bank v. Strumpf (1995), Justice Scalia announced that deposit accounts are not "property". Five years later, the Uniform Commercial Code was amended to make deposit accounts collateral for the depositary bank maintaining the account, thereby crowding the field previously occupied by the common law right of setoff. Security interests attach to personal "property." Security interests attach to deposit accounts. Deposit accounts, by syllogistic logic, are property. Does this mean that the UCC has overruled the Supreme Court? We argue not. A deposit account is a mere contract in the two-person universe that contract law presupposes. A deposit account …

Secured Credit And Effective Entity Priority, Christopher W. Frost

Law Faculty Scholarly Articles

The historical and doctrinal development of secured transactions and bankruptcy law has created a priority system that is asset based. Secured creditor priority is tied to the value of specific assets that constitute the secured creditor’s collateral and not to the value of the debtor itself. And yet, in corporate bankruptcy cases, lenders and their attorneys often assert broad claims to the entire enterprise value of the entity—that is, to the present value of the cash flows that the entity will generate as a going concern. The doctrinal basis for such claims is often unstated, however, and several commentators have …

Manipulating Random Assignment: Evidence From Consumer Bankruptcies In The Nation's Largest Cities, Edward R. Morrison, Belisa Pang, Jonathon Zytnick

Faculty Scholarship

Random case assignment is thought to be an important feature of decision-making in federal courts because it helps guard against favoritism (actual or perceived) toward particular parties or types of cases. In bankruptcy courts, cases are randomly assigned to both judges and trustees. In Chapter 7 cases, for example, the trustee is a quasi-judicial actor, typically a private-sector lawyer, who has been selected to audit the debtor's finances, find and liquidate assets, and police compliance with the law. We study three major bankruptcy jurisdictions (covering Chicago, Los Angeles, and parts of New York) and find that the random-assignment process for …

Reforming Institutions: The Judicial Function In Bankruptcy And Public Law Litigation, Kathleen G. Noonan, Jonathan C. Lipson, William H. Simon

Faculty Scholarship

Public law litigation (PLL) is among the most important and controversial types of dispute that courts face. These civil class actions seek to reform public agencies such as police departments, prison systems, and child welfare agencies that have failed to meet basic statutory or constitutional obligations. They are controversial because critics assume that judicial intervention is categorically undemocratic or beyond judicial expertise.

This Article reveals flaws in these criticisms by comparing the judicial function in PLL to that in corporate bankruptcy, where the value and legitimacy of judicial intervention are better understood and more accepted. Our comparison shows that judicial …

"Undue Hardship" And Uninsured Americans: How Access To Healthcare Should Impact Student-Loan Discharge In Bankruptcy, Alexander Gouzoules

Faculty Publications

Student-loan debt has grown to unprecedented heights. Contributing to the severe burden imposed by these debts is the Bankruptcy Code’s unique presumption that they are not dischargeable. To overcome that presumption, a debtor must establish that repayment of her loans would constitute an “undue hardship.” This essay examines the disagreement among bankruptcy courts that have interpreted the “undue hardship” standard in situations where a debtor is unable to afford health insurance—a common occurrence among the economically disadvantaged. After examining recent healthcare reforms, I argue that Congress has expressed a judgment that all Americans should obtain minimum essential healthcare. Though this …

Insolvency And Trademarks: How The Bankruptcy Code's Treatment Of Trademarks Promotes Naked Licensing, 18 J. Marshall Rev. Intell. Prop. L. 475 (2019), Michael Hopkins

UIC Review of Intellectual Property Law

In 1988, Congress amended § 365 of the Bankruptcy Code, which deals with the rejection of executory contracts, in order to allow intellectual property licensees to retain usage rights. However, this amendment did not include adding trademarks to the Bankruptcy Code’s definition of “intellectual property.” As such, Circuit Courts are divided on what remedies are available to trademark licensees following a licensor’s rejection of their agreement. Recently, the circuit split escalated when the First Circuit decided Mission Product Holdings, Inc. v. Tempnology, LLC, which was inconsistent with the Seventh Circuit’s 2014 holding in Sunbeam Products, Inc. v. Chicago American Manufacturing. …

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 …

Section 707(B) Standing For Parties In Interest - Who Cares, Laura B. Bartell

Law Faculty Research Publications

No abstract provided.

Tax Foreclosures As Fraudulent Transfers - Are Auctions Really Necessary, Laura B. Bartell

Law Faculty Research Publications

No abstract provided.

Access To Justice And The Denial Of Stay In A Pending Bankruptcy Appeal: Reviewability By The Courts Of Appeals, Robert J. Landry Iii

American University Business Law Review

No abstract provided.