Sky Blog
Credit Suisse (CS) was sold to UBS on March 19, 2023, to avoid its further deterioration from long-lasting distress and widespread distrust, especially after the collapse of Silicon Valley Bank. The most contentious point of the deal may have been …
The contraction of the market for special purpose acquisition companies (SPACs) and the recent challenges de-SPACed companies have encountered have attracted considerable press attention. The stocks of many de-SPACed businesses — companies formed by the merger of a SPAC with …
One of the primary attractions of cryptocurrency, for libertarians and blackmailers alike, is its relative freedom from the governmental oversight and involvement that comes with traditional currency. Yet this anti-government tilt is a problem where chapter 11, or bankruptcy generally, …
A key principle of Chapter 11 corporate reorganizations is the “absolute priority rule.” It requires that the claims of a dissenting class of creditors be paid in full before any stakeholders in a class junior to such dissenting …
In just three years, crypto conglomerate FTX Group went from start-up to a $40 billion global phenomenon to a company in “free-fall” Chapter 11. The debacle has been most brutal for millions of FTX customers, who are living through the …
Responses to financial crises can have the unfortunate effect of creating “zombie” firms, companies whose operating profits are insufficient to cover their debt service. These companies would probably have gone bankrupt without the forbearance of banks or regulators or other …
Bankruptcy-remote structuring – structuring an entity to protect it from internal or external factors that might prevent it from paying its debts as they come due or make it the subject of a bankruptcy case – is crucial to a …
Among those who study corporate financial distress and reorganization, the notion that senior lenders are in control is deeply ingrained. Celebrated papers in the law and corporate finance literatures attribute lender influence during periods of distress to blue-sky contracting practices.…
In a new article, I discuss the impact of the currently turbulent global economic environment on the prospect for sovereign debt defaults and restructurings in emerging economies. I also review three types of emerging markets sovereigns that may be at …
One of the key unresolved questions surrounding crypto-custodian bankruptcy proceedings under the U.S. Bankruptcy Code is whether or not digital assets that are held by a crypto exchange on behalf of platform users could be viewed as the exchange’s corporate …
Distressed firms may avoid an otherwise beneficial Chapter 11 reorganization because they fear losing customers. In our recent paper, we use two experiments to estimate the effect of corporate bankruptcy on consumer demand for a bankrupt firm’s products. We …
July 31, 2020, was an ill-fated day for financier Dan Kamensky. It began on a bright note, as his billion-dollar hedge fund stood to profit from a possible settlement in Neiman Marcus’ bankruptcy.[1] Not only had the Official Committee …
Some countries have a compelling argument for why they should not be expected to join the planetary effort to fight climate change. These are countries facing the need to restructure their external debt. By definition, sovereigns that cannot pay what …
While the Covid‑19 pandemic continued into 2021, the sharp rise in corporate bankruptcies that we saw in 2020 did not. Due to unprecedented government assistance and the continued availability of credit at historically low interest rates, companies that survived 2020 …
Corporate creditors, perhaps like Americans generally, like to think of themselves as rugged individuals who also work within a communal system. The fundamental tension is clearest at the point of default: Too much individuality, and a small minority of creditors …
When should directors be held liable for their company’s distressed financial condition? In a recent article, we show that the answer varies widely across legal regimes. We focus on the zone of insolvency, a phase in the company’s life …
In a recent essay, Shocking Business Bankruptcy Law, I discuss how crisis is used strategically to push legal boundaries in large chapter 11 cases in ways that are not readily reversed. I focus primarily on two phenomena. The first …
The COVID pandemic prompted global economic problems that many predicted would lead to an unprecedented number of corporate bankruptcies. The predictions were wrong, largely because governments responded with extraordinary measures. Congress, for example, pumped trillions of dollars into the U.S. …