Business Organizations Law Commons^™

The Business Bankruptcy “Big 3” And The Unanticipated Benefits Of Subchapter V, Marshall V. Ringwood

BYU Law Review

The liberal bankruptcy venue rules in the United States have their defenders and advocates. Subchapter V of the Bankruptcy Code came into effect in 2020, justified as a bipartisan solution to a longstanding problem in corporate bankruptcy where restructuring under Chapter 11 was prohibitively expensive for small-business debtors. On June 21, 2024, Subchapter V’s extended debt limit of $7,500,000 in liabilities reverted back to a statutorily defined $3,024,725. In addition to the justifications offered by organizations such as the American Bankruptcy Institute (ABI) for both Subchapter V, generally, and a permanent increase to its debt limit, I argue that Subchapter …

Debt’S Dominion: A New Epilogue, David Skeel

BYU Law Review

This Essay, written for the “Who Governs Debt’s Dominion” symposium, looks back on Debt’s Dominion: A History of Bankruptcy Law in America as the twenty-fifth anniversary of the book’s publication nears. The Essay begins, in Part I, by briefly describing how Debt’s Dominion came about. Part II identifies and seeks to explain a striking decline in optimism about American bankruptcy law since Debt’s Dominion was first published. Part III explores a few of the major recent developments in consumer bankruptcy, small business bankruptcy, and large-scale corporate reorganization that I would have analyzed in the book if it were written today. …

The National Security Internet, Anupam Chander

Georgetown Law Faculty Publications and Other Works

In response to widespread foreign surveillance and growing geopolitical distrust, governments are erecting a national security internet. Pioneered by China, national firewalls have gone global. But where firewalls sought to keep information out, they now seek to keep data in. Governments keen to avoid their citizens’ data from falling into foreign hands demand not only that personal data be stored on local servers, but also require that it be stored on local servers by local companies—what this Article calls “data localization squared.” Enforcing this demand requires a new mechanism of transnational control: immunity from foreign jurisdiction. Artificial Intelligence (AI) systems, …

Through The Lens Of Natural Selection: Understanding The Development And Adoption Of Legal Forms Of Business Organization, Brent J. Horton

William & Mary Business Law Review

This Article makes three contributions to the scholarship on the development and adoption of legal forms of business organization (LFBO). First, this Article examines how Charles Darwin’s theory of natural selection (i.e., variation, selection, and inheritance) can provide an overarching framework that can integrate previous theories of LFBO evolution propounded by Hurst, Blair, Hansmann, Kraakman, and Squire.

Second, Hurst, Blair, Hansmann, Kraakman, and Squire focused primarily on the evolution of joint stock companies and corporations during the American Industrial Revolution. This Article uses the lens of natural selection to explain the development and adoption of more recent forms of business …

Structuring A Practice Sale: The Basics, Daniel Schulte Jd

The Journal of the Michigan Dental Association

This legal column provides an overview of the basic structures involved in selling a dental practice. It distinguishes between equity interest sales, which often favor sellers through capital gains treatment and liability transfers, and asset sales, which buyers generally prefer to avoid liabilities and gain tax depreciation benefits. The author discusses the role of a Letter of Intent, the importance of due diligence, and professional valuation, urging practitioners to assemble a team of specialized legal and financial advisors.

The Bankruptcy Judge And The Generalist Tradition, Alexander Gouzoules

BYU Law Review

The prevailing academic consensus is that bankruptcy judges are specialists presiding over specialized courts. This Article contends that this description is incomplete and, in some respects, inaccurate. Drawing on scholarly models of judicial specialization and historical surveys of the field, this Article contends that bankruptcy judges reflect a hybrid design choice: procedural specialization combined with substantive generalism. This model delivers many of the observed benefits of judicial specialization (including efficiency and technical competence) while preserving the cross-pollination of ideas and other benefits associated with the generalist tradition of American judging.

This Article also reflects on contemporary developments—most notably the rise …

Finding Debtor’S Counsel, Anthony Casey, Emma Lotts

BYU Law Review

In this Essay, we explore the question of how to assess the independence of debtor’s counsel in Chapter 11. The question has arisen in recent high-profile bankruptcy cases, attracting renewed attention from commentators. We examine these cases and revisit the unique role that debtor’s counsel serves.

From this analysis, a few guiding principles emerge for determining independence and managing conflicts that may arise. First, consistent with the rules outside of bankruptcy, sophisticated parties are capable of waiving conflicts and should be free to do so when their interests alone are affected by the conflict. Second, the possibility of conflicts—both real …

Derivative Attorney-Client Privilege In Organizations, Douglas R. Richmond

University of Miami Business Law Review

A lawyer and client must be able to communicate about the client’s legal affairs in confidence for the lawyer to be able to meaningfully advise the client, hence courts’ recognition of the attorney-client privilege. Fundamentally, the very term “attorney-client privilege” seemingly requires a lawyer’s participation in a communication for the privilege to attach. But, in fact, lawyers need not always participate in client communications for the attorney-client privilege to shield the communications from discovery. Clients or their employees’ confidential conversations among themselves with respect to legal matters sometimes deserve privilege protection. This derivative application of the privilege can be crucial …

Bankruptcy Judging After Williamson, Vincent S.J. Buccola

BYU Law Review

This Essay asks how bankruptcy judges ought to orient their substantial, statutory discretion in business reorganization cases. The motivating observation is that bankruptcy law enacts a kind of forced integration of productive assets. To shed light on the contemporary problems that bankruptcy judges face, I thus look to two classic approaches to the economic theory of the firm—from Oliver Williamson and from Oliver Hart. I conclude that nonjudicial institutions have largely surmounted the problems to which their theories point, leaving a different, and probably narrower, set of issues to worry about. Bankruptcy judges who have a notion that their job …

Coming Disruptions In Corporate Law, Douglas Sarro, Edward J. Waitzer

All Papers

Corporate law’s dynamism precludes bold predictions about its future. Instead, we set out to highlight principles relevant to its trajectory and frame looming, unresolved issues. In that vein, artificial intelligence and other digital technologies raise considerable new opportunities for directors to enhance their oversight and for shareholders to be better informed and make more meaningful use of their governance rights. At the same time, the potential for wide-scale automation of corporate activities via these technologies amplifies corporate power and resulting risks of harm, adding new urgency to past prescriptions for rethinking the relationship between corporate and other areas of law …

Fiscal Sponsorship In Truly Independent Film: Entity And Model Choice And Legal Risks, Samuel Johnson

Washington Journal of Law, Technology & Arts

This article examines fiscal sponsorship as a legal and financing structure for “truly independent” films—low-budget, non-commercial projects created by filmmakers without access to studio financing, tax incentives, or traditional investors. Neither standalone nonprofit incorporation nor purely for-profit entity structures adequately address the unique needs of such projects. After surveying the development of fiscal sponsorship as a means of funding projects that meet an exempt purpose, relevant IRS guidance, and current prevailing practices and organizational structures in independent film, the article contends that a Model C (“regranting”) fiscal sponsorship paired with a single-member limited liability company (SMLLC) offers the optimal balance …

The Labyrinth Of International Merger Regulation: A Procedural Path Forward, Michael Volkert

Northwestern Journal of International Law & Business

In 1890, the first antitrust law was passed in the United States with the enactment of the Sherman Act. Over the past 134 years, jurisdictions across the globe have passed competition laws. One key aspect of competition law is a regulator’s ability to prevent anti-competitive M&A transactions. More jurisdictions are requiring merging firms to notify regulators prior to completing a merger through a process called pre-merger notification. As more global pre-merger notification laws develop, firms engaged in M&A will be required to file with more regulatory bodies, delaying transactions, increasing costs, and causing comity dilemmas. This Article investigates the current …

Corporate Responsibility In Business Dealings With War Criminals, Michael "Mac" Richards

Human Rights Brief

In the Democratic Republic of the Congo (DRC), a decades-long conflict has displaced over fourteen million people, killed over six million, and led to the highest rates of sexual violence among any other nation in the world. The DRC is the source of some of the most valuable resources used in the production of consumer electronics: gold, copper, and cobalt. Militia groups, such as Movement Du 23 Mars (M23) and the Allied Democratic Forces (ADF), are taking advantage of the nation’s vast mineral reserves by seizing control of local mining operations and exporting the minerals through neighboring Rwanda. These minerals …

The Fiduciary Game, Lauren R. Roth

Elisabeth Haub School of Law Faculty Publications

Fiduciary duties are supposed to bridge the gap between public and private law. Private actors who engage in “public or quasi-public” functions (e.g., corporate directors and pension administrators) are often subject to fiduciary constraints to protect vulnerable parties who lack power in relationships with these actors. Recently, scholars have argued that both courts and legislatures have inappropriately expanded the use of fiduciary duties to purely private relationships. But what if the problem is not the expansion of fiduciary duties to private relationships, but the increasing delegation of public powers to private actors whose behavior cannot be adequately constrained by fiduciary …

Reporting Materiality Under The Sec Cybersecurity Disclosure Rules: How Corporate Boards Balance Duty And Risk For Cyber Threats And Incidents, Deborah Slattery-Pereira

American University Business Law Review

The Security Exchange Commission’s (SEC) cybersecurity rules require that public companies disclose a material cyber threat or incident and the impact of the incident on the company’s business Corporate boards must disclose any cyber-related information that would affect a reasonable shareholder’s investment decisions. These rules delegate to the corporate board and management the decision of which cybersecurity events qualify as material to investors. Directors and officers must also decide when and how to disclose to the SEC, and what information to report.

The SEC Cybersecurity Rules increase compliance and litigation costs for public companies, as shareholders can use this information …

Havens For Corporate Lawbreaking, William J. Moon

Faculty Scholarship

Whether corporations are obligated to maximize profits or if they ought to consider societal interests more broadly remains one of the most highly contested debates in corporate law. Yet even the fiercest defenders of the firm’s profit motive concede that the corporation’s profit-seeking function cannot justify breaking the law. As a matter of American corporate law, directors and officers are in breach of their fiduciary duties if they facilitate or engage in profit-maximizing illegal activities. Or so we thought.

This Essay reveals a troubling trend of jurisdictions undercutting the legal compliance obligations of directors and officers. The current legal architecture …

Global Supply Chain Resilience In Emerging Technologies: A Case Study Of Bitcoin Mining, Kishanthi Parella, Carla L. Reyes

Scholarly Articles

The United States has put into motion bold plans in critical and emerging technologies to bolster its national and economic security.  For example, the federal government created a national bitcoin strategic reserve and a stockpile of other cryptocurrency; while several states have committed to or are considering similar goals.  However, the security of these reserves is dependent on two types of supply chains within the Bitcoin mining industry: analogue supply chains, relating to the physical components needed for Bitcoin mining, and data supply chains, relating to the complex and layered logistical network of actors that create input into …

Re-Examining U.S. Bailouts In The Digital Era: Moral Hazard And Adverse Consequences, Joel Slawotsky

American University Business Law Review

Financial institutional bailouts have become the new normal in recent decades. From the savings and loan crisis, to the sub-prime, to SVB and Signature, the U.S. government and regulators have decided that the failure to protect depositors and investors could lead to bank runs, a destabilized banking sector, and ultimately economic turmoil inflicting tremendous monetary and social costs on citizens. However, the mainstreaming of bailouts has led to moral hazard, i.e., the expectation among all stakeholders including financial institutions, investors, creditors, and regulators, that a government rescue is inevitable. The problem of moral hazard is the creation of incentives to …

The Social Promise Of Hybrid Entities, Frederick M. Spight Jr.

American University Business Law Review

Many Historically Black Colleges and Universities (HBCUs) are struggling to stay afloat. These historic, and historically underfunded, institutions suffer from a chronic shortage of resources, leading to the notable closures of schools, like Concordia College. Some critics question the modern place of the HBCU as a relic of a bygone era. This article argues, however, that HBCUs are worth sustaining and provides the legal tool to do so: the hybrid entity. 

Hybrid entities arose from the social enterprise movement, which sought to harness the power of both nonprofit and for-profit organizations. Operating under the philosophy of “doing well, while doing …

Incentivized Delegation In Corporate Criminal Investigations: State Action, Unconstitutional Conditions, And Fifth Amendment Erosion., Ying Zhou

American University Business Law Review

This Article identifies and critiques “incentivized delegation,” an enforcement regime in which the Department of Justice (DOJ) conditions prosecutorial leniency on corporations’ completion of specified, prosecution-oriented, internal investigations of employee misconduct. While courts readily find state action when the government formally delegates investigative functions, they have not squarely addressed whether corporate investigations undertaken to secure prosecutorial leniency—without explicit governmental direction—should likewise trigger state-action scrutiny. United States v. Coburn illustrates the blind spot: by insisting that state action requires overt governmental direction and control, the decision exposes a fundamental failure to appreciate how the government can embed investigative mandates within the …