Bankruptcy Law Commons^™

The Motor City Needs Oil (On Canvas): An Argument In Support Of Detroit's "Grand Bargain", Jonathan A. Weeks

Georgia Law Review

Now the largest municipality in the history of the United States to go bankrupt, Detroit very nearly lost its famous art collection to its creditors. To protect its collection, Detroit proposed what is now often referred to as the "grand bargain," which involved creating a corporation that paid $816 million for the entire art collection provided that the amount paid was earmarked for pension holders in Detroit. The deal resulted in realizing two goals: keeping the art collection in Detroit and protecting pensioners who faced a huge loss in the wake of the bankruptcy. Critics of the grand bargain claim …

Oh, What A Relief It (Sometimes) Is: An Analysis Of Chapter 7 Bankruptcy Petitions To Discharge Student Loans, Aaron N. Taylor, Daniel Sheffner

All Faculty Scholarship

Conventional wisdom dictates that it is all-but-impossible to discharge student loans in bankruptcy. This contention, however, misstates the fact that bankruptcy discharge of student loans is possible—and it happens. This Article presents a statistical analysis of what happened when Chapter 7 bankruptcy petitioners in the First and Third federal judicial circuits filed 523(a)(8) adversary proceedings—or proceedings to discharge their student loan debt due to an “undue hardship.” In our analysis, we found undue hardship discharge rates of 54% in the First Circuit and 24% in the Third Circuit. But more significantly, we found that undue hardship determinations were relatively rare. …

Restructuring Municipal Bankruptcy, Laura Napoli Coordes

Utah Law Review

What sorts of legal relief should be available to a municipality in financial distress? Chapter 9 of the Bankruptcy Code has served as an option of last resort for many municipalities over the years. But as this Article illustrates, Chapter 9 arguably falls short of an effective solution and at times seems to contravene the foundational principles underlying bankruptcy law. By examining recent Chapter 9 filings, this Article presents a comprehensive analysis of how and why Chapter 9 has failed to address the problems that characterize municipal insolvencies. It argues that Chapter 9, in both practice and principle, has proved …

Fiduciary Capacity And The Bankruptcy Discharge, Jonathon S. Byington

Faculty Law Review Articles

Bankruptcy law has fiercely competing policies. A primary one is the debtor's fresh start. Another is that discharge of debt is a selectively conferred privilege rather than an unlimited right. This latter policy is manifested in part by the Bankruptcy Code's exceptions to discharge. One exception involves a debt "for . . . defalcation while acting in a fiduciary capacity."1 In 2013, the Supreme Court addressed the meaning of the term "defalcation" and established a new, heightened mental standard based on the Model Penal Code's definition of recklessly.2 The meaning of the term "fiduciary capacity" is not clear. This Article …

Worlds Colliding: Competition Policy And Bankruptcy Asset Sales, Max Huffman

Villanova Law Review (1956 - )

No abstract provided.

Regulating Public Offerings Of Truly New Securities: First Principles, Merritt B. Fox

Faculty Scholarship

The public offering of truly new securities involves purchases by investors in sufficient number and in small enough blocks that each purchaser’s shares can reasonably be expected to be freely tradable in a secondary market that did not exist before the offering. Increasing the ability of small and medium-sized enterprises (SMEs) to make such offerings has been the subject of much recent discussion.

At the time that a firm initially contemplates such an offering, unusually large information asymmetries exist between its insiders and potential investors. These can lead to severe adverse-selection problems that prevent a substantial portion of worthy offerings …

The Modern Administrative State: Why We Have ‘Big Government’ And How To Run And Reform Bureaucratic Organizations, Sean Y. Sakaguchi

CMC Senior Theses

This work asserts that bureaucratic organization is not only an inevitable part of the modern administrative state, but that a high quality bureaucracy within a strongly empowered executive branch is an ideal mechanism for running government in the modern era. Beginning with a philosophical inquiry into the purpose of American government as we understand it today, this paper responds to criticisms of the role of expanded government and develops a framework for evaluating the quality of differing government structures. Following an evaluation of the current debate surrounding bureaucracies (from both proponents and critics), this thesis outlines the lessons and principles …

Recent Developments In Bankruptcy Regulation: Mortgage Servicing Rules, The Fdcpa, And The Cfpb, Frederick Tung, Alane A. Becket, Sarah Bolling Mancini, Nick Wooten

Faculty Scholarship

MS. DEPPERT: Welcome back. Before we begin, I'd like to take this opportunity to introduce you to our second panel of the day, our Consumer Panel, which will discuss Recent Developments in Bankruptcy Regulation, including mortgage servicing rules, the Fair Debt Collection Practices Act (the "FDCPA"), and the Consumer Financial Protection Bureau (the "CFPB"). This afternoon we are privileged to have the following distinguished panelists join us. First we have Alane Becket, Managing Partner at Becket & Lee LLP, in Malvern, Pennsylvania, a law firm representing primarily consumer lenders in bankruptcy proceedings. Ms. Becket was elected to the Board of …

Underwriting Sustainable Homeownership: The Federal Housing Administration And The Low Down Payment Loan, David Reiss

Georgia Law Review

The United States Federal Housing Administration (FHA) has been a versatile tool of government since it was created during the Great Depression. The FHA was created in large part to inject liquidity into a moribund mortgage market. It succeeded wonderfully, with rapid growth during the late 1930s. The federal government repositioned it a number of times over the following decades to achieve a variety of additional social goals. These goals included supporting civilian mobilization during World War II; helping veterans returning from that war; stabilizing urban housing markets during the 1960s; and expanding minority homeownership rates during the 1990s. It …

Energy Derivatives: Which Country (U.S. Or U.K.) Provides The Best Customer Asset Protections To An Energy Trading Firm If Its Brokerage Firm/Counterparty Files For Bankruptcy, Ronald H. Filler

Articles & Chapters

No abstract provided.

Better Than Bankruptcy?, Andrew B. Dawson

Articles

According to many in the bankruptcy field, small business debtors are increasingly turning to state debtor-creditors laws as an alternative to federal bankruptcy relief. One particularly popular state law is the assignment for the benefit of creditors. The conventional wisdom is that these procedures provide a state law alternative to liquidate a business.

This article reports the results of an original empirical study that challenges this conventional wisdom. Gathering data from every assignment for the benefit of creditors in a major metropolitan area over a three-year period, this study shows that debtors and their secured creditors are using these procedures …

Sovereign Debt: Now What?, Anna Gelpern

Georgetown Law Faculty Publications and Other Works

The sovereign debt restructuring regime looks like it is coming apart. Changing patterns of capital flows, old creditors’ weakening commitment to past practices, and other stakeholders’ inability to take over, or coalesce behind a viable alternative, have challenged the regime from the moment it took shape in the mid-1990s. By 2016, its survival cannot be taken for granted. Crises in Argentina, Greece, and Ukraine since 2010 exposed the regime’s perennial failures and new shortcomings. Until an alternative emerges, there may be messier, more protracted restructurings, more demands on public resources, and more pressure on national courts to intervene in disputes …

Targeted Subordination Of Official Sector Debt, Lee C. Buchheit, Mitu Gulati

Faculty Scholarship

If Greece’s debt is unsustainable, and most observers (including the IMF) seem to think it is, the country’s only source of funding will continue to be official sector bailout loans. Languishing for a decade or more as a ward of the official sector is undesirable from all perspectives. The Greeks bridle under what they see as foreign imposed austerity; the taxpayers who fund the official sector loans to Greece balk at the prospect of shoveling good money after bad. The question then is how to facilitate Greece’s ability to tap the private capital markets at tolerable interest rates. The IMF’s …

When All Else Fails: The Evolution Of Customer Asset Protections After Brokerage Bankruptcy, Ronald H. Filler

Articles & Chapters

No abstract provided.

A Missing Piece: The Importance Of Control Over An Undue Hardship In A Request To Discharge Student Loans Through Bankruptcy, Megan E. Niespodziany

Kentucky Law Journal

No abstract provided.

Taking Bankruptcy Rights Seriously, Rafael I. Pardo

Scholarship@WashULaw

Perhaps more so than any other area of law affecting individuals of low-to-moderate means, bankruptcy poignantly presents an affordability paradox: The system’s purpose is to relieve individuals from financial distress, yet it simultaneously demands a significant commitment of resources to obtain such relief. To date, no one has undertaken a comprehensive study of the complexities and costs of the litigation burden that Congress has imposed on self-represented debtors who seek a fresh start in bankruptcy. In order to explore the problems inherent in a system that sometimes necessitates litigation as the path for vindicating a debtor’s statutory right to a …

Changes To Bankruptcy Forms And Pending Bankruptcy Rule Changes, Kathleen Klepfer

Law Faculty Publications

Nearly every form used by the bankruptcy courts went through a significant overhaul in December as part of a seven-year project designed to streamline the filing process. The voluntary petition—old Form B1—has now been split into three separate forms: B101 for individual debtors, B201 for nonindividual debtors, and B401 for foreign proceedings. This overhaul altered the format of most additional forms and schedules, including the internal “director’s forms,” all of which are now available on the court’s main form page. Because most form numbers changed as well, the courts have provided a conversion chart that aligns the old and new …

Can Parallel Lines Ever Meet? The Strange Case Of The International Standards On Sovereign Debt And Business And Human Rights, Daniel D. Bradlow

Scholarly Articles in Law Reviews & Journals

This special issue is a cooperation of the Yale Journal of International Law and the United Nations Conference on Trade and Development (UNCTAD). It emerged from UNCTAD’s work on sovereign debt workouts, specifically from its Working Group on a Sovereign Debt Workout Mechanism (2013 to 2015). The working group developed a Roadmap and Guide for Sovereign Debt Workouts, published in 2015. It proposes an incremental approach to sovereign debt workouts that relies on the continuous, progressive development of sovereign debt restructuring practice. This work has inspired the adoption of Basic Principles for Sovereign Debt Restructuring by the United Nations General …

Inside Safe Assets, Anna Gelpern, Erik F. Gerding

Publications

“Safe assets” is a catch-all term to describe financial contracts that market participants treat as if they were risk-free. These may include government debt, bank deposits, and asset-backed securities, among others. The International Monetary Fund estimated potential safe assets at more than $114 trillion worldwide in 2011, more than seven times the U.S. economic output that year.

To treat any contract as if it were risk-free seems delusional after apparently super-safe public and private debt markets collapsed overnight. Nonetheless, safe asset supply and demand have been invoked to explain shadow banking, financial crises, and prolonged economic stagnation. The economic literature …

Treating The New European Disease Of Consumer Debt In A Post-Communist State: The Groundbreaking New Russian Personal Insolvency Law, Jason J. Kilborn

Brooklyn Journal of International Law

This article examines the tumultuous transition from restrictive Communism to the debt-fueled consumer economy of modern Russia. In particular, it surveys Russia’s legal response to severe debt distress, situating it in the context of nearly one thousand years of historical development. Effective 1 October 2015, Russia finally joined most of its European neighbors in adopting a personal bankruptcy law, with characteristics that reflect both evolving international best practices and a series of lessons not learned. This article offers the first detailed exposition in English of the two steps forward represented by this new law, as well as an evaluation of …