Sky Blog
Chapter 11 was widely seen as a failure in the first decade of the Bankruptcy Code’s operation, the 1980s. Large firms were mired in bankruptcy for years; the process was seen as expensive, inaccurate, and subject to abuse. While basic …
In recent years, many countries have adopted some form of pre-packaged reorganizations (“pre-packs”), inspired largely by pre-packs popularized in the United Kingdom and the United States. By shortening insolvency proceedings, pre-packs can reduce the costs of financial distress and especially …
In the past few years, bankruptcy has emerged as a popular tool for resolving mass-tort litigation. Academics have largely greeted this development with skepticism and alarm, arguing that large corporations turn to bankruptcy to reduce expected payouts at the expense …
In recent years, Chapter 11 of the Bankruptcy Code has prompted critics to claim that, at least when it comes to large companies, it has become a lawless forum where bankruptcy judges have jettisoned fealty to the code in order …
The bankruptcy system has long been the last, best hope for firms seeking to resolve overwhelming mass-tort liabilities. The seminal case, Manville, resolved legacy asbestos liabilities through debtor and third-party funding of a claimant trust and an order channeling all …
Bernie Madoff died on April 14, 2021, while incarcerated in the Federal Medical Center in Butner, North Carolina, but he lives on in bankruptcy jurisprudence. The December 2008 disclosure that Bernard L. Madoff Investment Securities LLC (BLMIS) was a Ponzi …
Within a month, the U.S. Supreme Court will hear Harrington v. Purdue Pharma, L.P.,[1] a case that (i) could radically change the potential for bankruptcy to serve as the preferred mechanism for corporations seeking to resolve mass torts, …
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 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 …
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 …
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 …
Sitting as courts of equity, bankruptcy judges have embraced an exceptionalist role whereby they exercise widespread discretion in deciding cases. The doctrine of equitable subordination epitomizes bankruptcy exceptionalism and its potential for market distortion.
The doctrine originated as a remedial …
The United States Bankruptcy Code gives debtors wide discretion to reorganize in the venue of their choice. These lenient venue selection rules long have allowed bankruptcy courts in the District of Delaware and the Southern District of New York to …
On February 27, 2018, the U.S. Supreme Court issued a decision in Merit Management Group, LP v. FTI Consulting, Inc. (No. 16-784), settling a circuit split regarding the “safe harbor” provision in § 546(e) of the Bankruptcy Code. That section …
In my article Chapter 11, Corporate Governance and the Role of Examiners, I propose a possible solution to corporate governance problems caused by the debtor-in-possession model of Chapter 11 bankruptcy proceedings.
For 200 years, the equality of creditors norm—the idea that similarly situated creditors should be treated similarly—has been widely viewed as the most important principle in American bankruptcy law, rivaled only by our commitment to a fresh start for honest …
Law and economics scholars have long argued that efficiency is best served when a firm’s capital structure is arranged as a single, hierarchical value waterfall. In such a regime, claimants with seniority are made whole before the next-junior stakeholders receive …
Much has been written about U.S. Supreme Court Justice Antonin Scalia’s interpretive philosophy and his overall impact on the law. But surprisingly little attention has been paid to his contributions to modern bankruptcy law.
In an article about Justice Scalia’s …