Sky Blog
Last Thursday, the Supreme Court concluded its most tumultuous Term in recent memory. The Term was marked by a number of closely divided decisions on contentious issues ranging from President Biden’s vaccination mandate to gun rights to religious liberty. Anticipation …
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 …
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 …
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 …
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 …
A recent report by KPMG [1] on the behavior of chief executive officers (CEOs) suggests that 67 percent of UK CEOs trust their intuition over data. The impact of intuition may become problematic if it is driven by biased perception. …
In a new paper, we explain that variation in prospective liquidity in an industry or economy prompts changes in corporate lending and banking, including changes in the level of corporate borrowing, the type of debt contracts issued, the covenants contained …
In the spring of 2020, as the Covid-19 pandemic shut down economies around the world, pressure arose for governments to respond to the growing threat of pandemic-related market distress. In the United States, the initial proposals for government action varied …
The U.S. experienced an unprecedented number of home foreclosures during the Great Recession of 2007-2009. To limit defaults and deadweight losses, the government implemented various policies that reduced monthly payments by homeowners (i.e., Home Affordable Modification Program) and facilitated mortgage …
The COVID-19 pandemic has disrupted normal life and triggered massive economic slowdowns. In the United States, consumer spending has dropped dramatically and unemployment temporarily hit the highest levels since the Great Depression. As a result, many experts have projected a …
In 2017, Puerto Rico and certain of its affiliates filed “bankruptcy” petitions under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”). These cases are pending in the U.S. District Court for Puerto Rico; however, under …
The COVID-19 pandemic has created significant financial distress for many businesses and there have been a number of bankruptcy filings recently,[1] with more likely on the horizon. As a result, there is likely to be an increase in acquisitions …
We recently estimated the U.S. bankruptcy system’s ability to absorb an anticipated surge of financial distress among American consumers, businesses, and municipalities as a result of COVID-19.
An increase in the unemployment rate has historically been a leading indicator of …
Different countries have adopted various strategies to prevent or delay initiation of insolvency proceedings and protect businesses in the wake of the Covid-19 crisis. Global response has broadly been along the lines of providing direct financial aid (by way of …
The COVID-19 pandemic is causing financial distress to economically viable firms on an unprecedented scale. In this post, we introduce the novel idea of creditor cooperation duties to stabilize corporate workouts.
The prospect of widespread defaults by viable firms triggered …
The CARES Act passed in response to the COVID-19 crisis provides billions of dollars in industry-specific loans that will go to large corporations like Boeing and the major airlines. These provisions are part of a larger compromise that also puts …
Current policy discussions tend to minimize the role of bankruptcy law in mitigating the financial fallout from COVID-19. Scholars too are unsure about the merits of bankruptcy, especially Chapter 11, in resolving business distress. In this paper, we argue that …