Making unfair discrimination tests “fairer”: a proposal
Bankruptcy and Corporate Restructuring Committee of the New York City Bar Association,58 (1): 83–108 (November 2002)
Section 1129(b)(1) of the Bankruptcy Code requires that a Chapter 11 plan shall not "unfairly discriminate" if it is affirmed without acknowledging all classes of injured claims and interests. Court decisions on the interpretation and application of the unjustified discrimination standard have taken several different approaches, are difficult to reconcile and have led to some questionable results. Recently, some courts have applied a test proposed by Professor Bruce A. MarkellA new perspective on unfair discrimination in Chapter 11, 72 hours BANK. LJ 227 (1998), which discusses the pre-bankruptcy expectations of parties and whether pro-class treatment is warranted by contributions from favored creditors. While recognizing that Markell's test is a step in the right direction, the committee believes his test needs improvement. The Committee reviews the current legal position and, based on the case law before the Code and the legal structure and history of the Code, proposes a new judicial test to balance the conflicting guidelines of flexibility, fairness and predictability.
Unconcerned about Justice: A Response to ABCNY's Proposal on Unfair Discrimination
Professor Bruce A. Markell,58 (1): 109–122 (November 2002)
In this response to criticism from the New York City Bar AssociationA new perspective on unfair discrimination in Chapter 11, 72 hours BANK. LJ 227 (1998), the author first examines the many similarities between the ABCNY proposal anda new perspective. While this review shows agreement on many points in reorganization theory, it also highlights the stark differences that separate the two approaches. After responding to ABCNY's criticism ofa new perspective, the article argues that ABCNY's counter-proposal unduly increases certainty over other recovery targets and is based on an evaluation framework that is at odds with recovery practice.
At the intersection of regulation and insolvency:FCC vs Nextwave
William J. Perlstein and Kenneth A. Bamberger,59(1): 1-22 (November 2003)
Last period, inFCC gegen NextWave Personal Communications, Inc. ("NextWave"), the Supreme Court ruled that the Federal Communications Commission cannot revoke wireless communications licenses owned by a debtor under the Bankruptcy Act after the debtor fails to make payments due on their purchase. The code, the court ruled, prevented the agency from revoking licenses issued under its administrative authority even though the licensee had breached the requirement of "full and timely payment" set out in the agency's charter. The decision is significant in its specifics: the celebration related to the allocation of valuable licenses for the use of radio frequencies. However, the case also has broader implications for the treatment of government agencies in bankruptcy proceedings. In particular, the court's opinion points to three interconnected principles that can significantly limit the powers of the administrative bodies involved in the insolvency proceedings. First, the agencies are subject to the limitations of the bankruptcy law even when acting as regulators; second, bankruptcy laws may prohibit the application of a variety of license terms; and third, bankruptcy law trumps agency licensing rules. At the same time, however, the judgment gives effect to decisions of lower courts that limit the jurisdiction of the bankruptcy proceedings for administrative proceedings. This article provides the factual and procedural history of NextWave's litigation with the FCC and provides a preliminary assessment of the case's broader regulatory implications. Therefore, we attempt to examine some of the implications of the court's decision for the treatment of public creditors in bankruptcy proceedings and for the jurisdiction of bankruptcy courts in administrative matters. Finally, it examines the remaining options for government agencies to structure licensing processes to accommodate thisnext wavedecision ownership.
Section 363 Interest Free and Unrestricted Sales: Why the Seventh Circuit Court of Appeals in Precision Industries v. quality steel
Michael Saint Patrick Baxter,59(2): 475–501 (February 2004)
Rarely does a bankruptcy event have the potential to have a profound impact on the non-bankrupt world. insidePrecision Industries v. quality steel, the Seventh Circuit Court allowed a debtor to sell property free of a current lease in apparent disregard for the tenant's rights to retain ownership of the leased premises. This case will have profound implications for bankruptcy sales, home leasing and home lease financing. This article examines the decision inprecision industriesand its effect on the rights afforded to tenants by Section 365(h) of the Bankruptcy Act. The author claims that the case was misjudged. The author discusses some of the practical problems created byprecision industriesand suggests some strategies that can be employed to avoid its dangers.
Extension of Section 524(g) of the Bankruptcy Act to Parent Companies, Affiliates and Settlement Parties that are not Debtors
Susan Power Johnston and Katherine Porter,59(2): 503–27 (February 2004)
After reviewing the historical difficulties in resolving asbestos liability and the rationale for Section 524(g) of the Bankruptcy Code, this article examines recent attempts by non-debtors to use the bankruptcy of their subsidiaries, affiliates, or part of the transaction to obtain protection. against asbestos liability. Particular attention is paid to efforts in recent or pending cases to protect non-debtors and to issues that have prevented the confirmation of recovery plans in current cases.
Fiduciary duties of the directors of a company approaching bankruptcy and after bankruptcy proceedings have been instituted
Myron M. Sheinfeld und Judy L. Harris, 60(1): 79–107 (November 2004)
This article discusses the general fiduciary duties of company directors and how those duties change when a company becomes or is about to become insolvent and when the company is insolvent. The various checks to determine the insolvency of a public company are described. The article also addresses the fiduciary duties of directors in a Chapter 11 bankruptcy event. Specifically, the article discusses the duties of directors in the administration of the bankruptcy estate, the responsibilities of directors under Sarbanes-Oxley, and the exceptions of directors permitted under Chapter 11 Plans of Reorganization The Article provides directors with practical guidance on the proper discharge of their fiduciary duties under Chapter 11.
Derivatives in competition
narrow water,60(4): 1507–1546 (August 2005)
The Bankruptcy Act provides special and privileged treatment for securities, futures and commodity contracts, swaps and repurchase agreements. This special treatment includes the possibility for the non-obligor counterparty to exercise rights free from automatic suspension, the enforceability ofby the fact itselfCircumvention clauses and protections, including fraudulent transfers and preferences, except in the case of actual fraud. With the explosive growth in the volume of the various derivatives contracts, it is imperative that bankruptcy attorneys, whether representing the debtor or their creditors, as well as financial engineers who develop cutting-edge financial instruments, are fully aware of the benefits that the Bankruptcy Code offers, as well as the pitfalls related to the application and interpretation of the relevant provisions of the Code. This is all the more important given the significant extension of protections enacted under the Bankruptcy Abuse Prevention and Consumer Protection Act 2005, which comes into effect for bankruptcy proceedings commenced on or after April 17, 2005. This article analyzes the building blocks required for any derivative contract to qualify for the special treatment provided for in the Bankruptcy Act and presents a comprehensive analysis of the various issues that arise in relation to its interpretation and application.
Framework for Control of Electronic Trust Instruments – Compliance with UCC §§ 9-105
Task Force on Transferability of Electronic Financial Assets, eine gemeinsame Task Force des Cyberspace Law Committee und des Uniform Commercial Code Committee der ABA Business Law Section und des Open Group Security Forum,61(2):721–744 (February 2006)
Proof of Solvency: Preference Defense and Fraudulent Transfer Proceedings
Robert J. Stearn, Jr., 62(2): 359-396 (February 2007)
Solvency disputes can be a complicated task. This article provides a general roadmap for proving solvency in preferential defenses and fraudulent conveyance litigation. Three common measures of solvency are discussed: the "balance sheet" test; the “under capital” test; and the "Debt Paying Ability" test. The article also provides practical suggestions for criminal defense attorneys.
JB Heaton, 62(3): 983–1006 (May 2007)
This article explains the basic economic function of solvency tests and the interrelationships between the three solvency tests used in insolvency and company law. It also explains why credit diagnoses can vary depending on the test used. While one of these tests, the solvency test, is probably the best, in practice it can suffer from significant measurement error. Ultimately, multiple solvency tests make sense because the costs of not determining an existing insolvency outweigh the costs of not determining an insolvency.
Recharacterization of debt in state law
James M. Wilton und Stephen C. Moeller-Sally, 62(4): 1257–1280 (August 2007)
The debt reclassification doctrine, as developed in federal courts, imposes conflicting and sometimes inappropriate standards on insiders who seek to support their companies in times of financial distress. Three conflicting case-lines have emerged in debt downgrading jurisprudence, two that a debt downgrading is a separate possible cause of action under the bankruptcy law, and one that says such a claim has no legal basis. This article examines the shortcomings of these approaches and discusses state law as a basis for developing a principled doctrine of debt recharacterization. In accordance with longstanding legal principles, state law provides the appropriate framework for determining whether debt should be converted back into equity in bankruptcy cases. Using examples from Massachusetts and Wisconsin law, this article demonstrates that state law provides a greater degree of predictability in relation to enforcement of priority debt and can serve as a vehicle to resolve conflicting and conflicting evidence used in federal courts, to reconcile.
At the crossroads: The intersection of federal securities laws and the insolvency law
Wendy Walker, Mike Wiles, Alan Maza, and David Eskew,63 (1): 125–146 (November 2007)
This article examines the ways in which federal securities laws and the U.S. bankruptcy law work together and sometimes do not, focusing on the potential conflict between the Sarbanes-Fair Funds provision and the Oxley Act of 2002, which allows the Securities and Exchange Commission to fines and distribute monies collected from debtor companies to shareholders; and the "first priority rule," which prevents distributions to shareholders in the event of a Chapter 11 reorganization without full payment by creditors. While it's been raised in some of the biggest bankruptcies in recent years, including Enron, WorldCom, and Adelphia, the courts haven't addressed this potential conflict directly, and it raises questions for Congress to consider.
Corporate governance of troubled companies and the role of the lawyer in restructuring
DJ (Enero) Baker, John Wm. (Jack) Butler Jr. und Mark A. McDermott, 63(3): 855–880 (May 2008)
The executives and directors of a troubled company face a complex series of decisions as they attempt to restructure the company's business. These decisions can be difficult because when the company is insolvent, the fiduciary duties of officers and directors extend to all interested parties, including creditors. The role of the corporate recovery lawyer is essential in this uncertain environment. This article provides a comprehensive overview of recent court decisions and legislative changes regarding the fiduciary duties of officers and directors in troubled companies. It also offers practical applications of these principles to common situations directors and executives face when attempting to lead a troubled company through a successful reorganization.
Working Paper: Best Practices for Debt Attorneys
Task Force for Advocacy Discipline Best Practices Working Group, Ad-hoc Committee on Bankruptcy Court Structure and Insolvenz Proceedings, ABA Business Law Section,64(1): 79-152 (November 2008)
Special report on the preparation of consolidated substantive opinions
Das Structured Finance Committee und das Bankruptcy and Corporate Reorganization Committee der Association of the Bar Association of the City of New York,64(2): 411-432 (February 2009)
Bericht der Intercreditor Agreement Working Group First Charge/Second Charge Model
Commercial Finance Committee, ABA Commercial Law Section, 65(3): 809–884 (May 2010)
Campbell, Iridium and the future of scoring
Michael W Schwartz and David C Bryan, 67(4): 939 - 956 (August 2012)
Five years ago, two major valuation decisions by federal courts, Campbell and Iridium, ruled that market data, rather than testimony from paid litigation experts, should be considered when evaluating companies for litigation. Although Campbell and Iridium have made a number of decisions, their full potential for making business valuation litigation less expensive and less susceptible to hindsight bias has yet to be realised.
How safe are institutional assets in a custodian bankruptcy?
Edward H. Klees, 68(1): 103 - 136 (November 2012)
There is a widespread belief among institutional investors that escrow accounts in the United States are protected from bank failures. This assumption underpins trillions of dollars in assets held in custody by US banks. Despite the 2008 financial crisis, little or no attention has been paid to analyzing whether this belief is actually valid. This article argues that while the FDIC, as the custodian of nearly all failed banks in the United States, is likely to protect the assets in custody to the extent permitted by law, customers face a significant number of legal and operational risks that may limit recovery. their held assets. While investors can protect against some risks, others may be beyond their control. The article describes these risks and suggests improvement measures for institutional investors.
Brand licensing in the shadow of bankruptcy
James M. Wilton und Andrew G. Devore, 68(3): 739-780 (July 2013)
When a company licenses a trademark, settlement attorneys regularly point out that if the trademark licensor files for bankruptcy, the licensee may no longer have the right to use the trademark and may only have to file for monetary damages against the licensor. In fact, the ability of a trademark licensor to refuse a trademark license and limit a licensee's remedy to an actionable damages claim has posed a significant risk to licensees for twenty-five years, according to the Fourth Circuit case, Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc. This finding is based on the Bankruptcy Code's prohibition on providing certain remedies for non-obligor parties to refused contracts and is consistent with the Bankruptcy Code's policy of providing debtors with a cost-free opportunity to reorganize onerous contracts. However, in the summer of 2012, the Seventh Circuit, in its decision, upheld Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC held that a non-obligor trademark licensee retains the rights to use licensed trademarks after the debtor licensee opts out of the agreement. The ruling, which stems from a pre-Bankruptcy Code paradigm for understanding the rights of non-debtors under rejected enforceable contracts transferring property rights, creates a divided circle over the implications of denying a trademark license. This article alleges that the Sunbeam Products case misinterprets a licensee's trademark rights as acquired ownership and is therefore incorrect in both the Lubrizol case and the pre-bankruptcy law paradigm on which the Sunbeam Products case is based.
Market evidence, expert opinion and the estimated value of distressed companies
Robert J. Stark, Jack F. Williams und Anders J. Maxwell, 68(4): 1039-1070 (August 2013)
A year ago, The Business Lawyer published an article arguing that courts should rely mostly on “market” evidence, rather than expert opinion, when assessing the value of troubled companies. In Campbell, Iridium, and the Future of Valuation Litigation, authors Michael W. Schwartz and David C. Bryan argue that the nearly universal judicial attention to market data is: (1) supported by recent developments in case law; (2) it would avoid judicial hindsight bias; and (3) would allow for a more efficient assessment process. Ladies and gentlemen. Schwartz and Bryan further argued that in order to consolidate the paradigm shift, the courts should begin to impose a pre-trial obligation on all litigants intending to present an expert testimony, specifically to comply with the Federal Rule of Evidence. 702(a) to request permission to do so. This article takes an opposing view, arguing that Messrs. Schwartz and Bryan interpret applicable case law selectively, outside of a broader context of case law and in a manner that ignores deep-seated legal principles. The authors further allege that: a) Messrs. Schwartz and Bryan have not made a convincing case for widespread judicial "hindsight"; (b) they have also failed to demonstrate convincingly that their proposal will lead to significant gains in efficiency in the process; and (c) their theses fail in assessing the complexity of market dynamics. This article concludes that market evidence typically requires expert interpretation, particularly when used to value troubled companies.
Another comment on the complexity of market evidence in valuation procedures
Gregorio A. Horowitz, 68(4): 1071-1082 (August 2013)
This commentary offers a different perspective on the dialogue that began a year ago on these pages about the use of market evidence in valuation techniques. In Campbell, Iridium, and the Future of Valuation Litigation, Michael Schwartz and David Bryan argued that understanding the importance of market evidence and the costs and vagaries of a dispute between valuation experts should prompt courts to adopt a rebuttable presumption against the admissibility of expert evidence. Like Messrs. Stark, Williams and Maxwell, whose views are emphatically defended in a separate article here, they consider this proposal unwise, but for slightly different reasons. I agree with Messrs. Schwartz and Bryan that market evidence is fundamental to any question of value, but I contend that the market never speaks for itself, in fact it never speaks in a voice for laypeople to interpret. As an example, I present a "debt discount test" to determine whether the market views a company as insolvent (the issue addressed by both Campbell and Iridium) and show that while this test involves the interpretation of market data significantly simplified, market expert When applying, an opinion is inevitably required. Increasing recognition of the importance of up-to-date market information will improve valuation disputes and reduce areas of good faith disputes without the need for sweeping procedural limitations in adversarial proceedings.
Best practice report on electronic investigation (ESI) issues in insolvency cases
ABA Electronic Discovery (ESI) Bankruptcy Task Force, Bankruptcy Court Structure and Bankruptcy Proceedings Committee, ABA Business Law Division, 68(4): 1113-1148 (August 2013)
Equity Trustees and the Defense of In Pari Delicto exmo. Steven Rhodes und Kathy Bazoian Phelps;69(3): 699-716 (May 2014)
The recipients of the federal estate are estate creations. The in pari delicto doctrine is also an equity defense. When receivers are asked to administer the assets of a receiver on behalf of deceived victims, courts acting in equity must balance the victims' needs with the rights of the defendants in order to assert the pari delicto defense of litigation brought against them by the receiver do. Simultaneous lawsuits demonstrate the wide discretion that courts can exercise when it comes to bringing claims against the defense's allegations in pari delicto. However, courts must also be aware of a variety of issues and obstacles when deciding whether to allow the pari delicto defense.
Restore safe ports from repositories
Edward R. Morrison, Mark J. Roe und Christopher S. Sontchi, 69(4): 1015-1048 (August 2014)
In recent decades, the exemptions for repurchase transactions under the Insolvency Act have been expanded significantly. These buybacks, which correspond to short-term (usually overnight) secured loans, are exempt from key bankruptcy rules such as: preferential payment to favored creditors over other creditors. While these exceptions may be warranted for US Treasuries and similar liquid obligations backed by the full confidence and credit of the US government, they are not warranted for mortgage-backed securities and other securities that may be illiquid or may not live up to their expected value reachable. long-term value in a panic. The omission of basic bankruptcy rules facilitates this type of panic selling and, according to many experts, shaped and exacerbated the financial crisis of 2007-2009. As before, exceptions to the normal bankruptcy rules should be limited to US Treasury bonds and similar liquid securities. The recent extension of these exemptions to mortgage-backed securities should be reversed.
Massey Research Award Symposium on Law, Innovation and Capital Markets — Foreword
70(2): 319-320 (Spring 2015)
Financial Innovation and Governance Mechanisms: The Evolution of Decoupling and Transparency Henry TC Hu;70(2): 347-406 (Spring 2015)
Financial innovations have fundamental implications for the most important content and information-based mechanisms of corporate governance. "Unbundling" undermines classic interpretations of the distribution of voting rights between shareholders (e.g. through "empty vote"), the control rights of debtors (e.g. through "empty credit" and "empty interest"). "/"unbound interests") and acquisition practices (e.g., through "modifiable ownership" to avoid disclosure under Section 13(d) and to avoid activation of certain poison pills). Stock-based compensation, management performance tracking, market corporate governance, and other governance mechanisms based on strong information predicate and market efficiency are being undermined by the transparency issues posed by financial innovation. The basic information approach that the SEC has always used, the "descriptive mode" that relies on "intermediate accounts" of objective reality, is woefully inadequate to capture highly complex objective realities such as the realities of heavily involved big banks in derivatives. . Ironically, the government's primary response to such transparency challenges, a new disclosure regime that went into effect in 2013, the first since the SEC's inception, is also causing difficulties. This new parallel system of disclosures, developed by the banking regulator and applicable to large financial institutions, does not primarily aim at the well-known purposes of transparency, investor protection and market efficiency.
As starting points, this article offers brief summaries of: (1) the analytical framework developed for 'decoupling' in 2006-2008 and its calls for reform; and (2) the analytical framework developed in 2012-2014 that reconceptualizes "information" in terms of three "modes" and addresses the two parallel universes of disclosure.
Regarding decoupling, the article goes on to detail some of the key developments after 2008 (including the status of reform efforts) and the way forward. A detailed analysis is provided of TELUS' landmark December 2012 testimony in the British Columbia Supreme Court, which includes perhaps the most complicated public example of separation yet. The article discusses recent actions by the Delaware legislature and judiciary, the European Union and the bankruptcy courts, and the urgent need for further action by the SEC. When debt decoupling research was introduced, there was limited evidence of the phenomenon's significance. This article helps fill that gap.
In terms of information, the article begins by describing the demands for reforms related to the 2012-2014 analytical framework. With revolutionary advances in computing and web-related technologies, regulatory agencies no longer have to rely almost exclusively on the descriptive mode based on intermediate representations. Regulators should also start to systematically implement the “transfer mode” based on “information only” and the “hybrid mode” based on “moderately pure information”. The article then outlines some of the key ways the new analytical framework can contribute to the SEC's long-needed and sweeping new initiative to address "disclosure effectiveness," even in "difficult-to-representation" contexts unrelated to financial innovation . (e.g. pension disclosures and high-tech companies). The article concludes with a succinct version of the analytical framework's thesis that the new morphology of public information – consisting of two parallel normative universes with different ends and means – is unsustainable in the long term and poses certain problems that require a legal solution. In the meantime, however, certain steps may be taken that require coordination between the SEC, the Federal Reserve and others.
Corporate bankruptcy tourists Oscar Couwenberg and Stephen J. Lubben;70(3): 719-750 (Sommer 2015)
Foreign companies facing financial difficulties have a choice: restructure in their home country or bankruptcy in the United States. And some foreign companies file for bankruptcy in the US. But aside from occasional anecdotal accounts of how often this actually happens or what types of foreign companies can file in the United States is something that has been almost completely understudied. U.S. companies filing under Chapter 11 and foreign companies filing under Chapter 15 are often audited, but what about foreign companies filing under Chapter 7 or 11? This article fills this apparent gap in the literature by building a database of foreign corporate debtors. This article analyzes this new data set and concludes that foreign debtors apply US bankruptcy laws in a manner diametrically opposed to most existing considerations on cross-border bankruptcy. Foreign debtors in particular are using the US bankruptcy regime to enforce global asset relief without the involvement of any jurisdiction other than the US where the case is pending. This is in stark contrast to UNCITRAL's efforts to facilitate cross-border cooperation between jurisdictions.
the Uniform Voidable Transactions Act; or the 2014 amendments to the Uniform Fraudulent Transfers Act Kenneth C. Kettering;70(3): 777-834 (Sommer 2015)
In 2014, the National Conference of Commissioners on Uniform State Laws approved a number of changes to the Uniform Fraudulent Transfers Act. Among other changes, the amendments changed the law's name to the Uniform Voidable Transactions Act. In this paper, the rapporteur of the commission that drafted the reforms describes the proposed reform and comments on the changes made to the law.
The Medicare Provider Contract: Is It a Contract or Not? And why does anyone care?
Samuel R Maizel and Jody A Bedenbaugh,71(4): 1207-1240 (Herbst 2016)
The article first addresses the US government's conflicting positions on whether the Medicare Provider Agreement is an enforceable contract in and out of bankruptcy court. It examines whether the government's positions can be reconciled and whether the principles of legal estoppel and legal estoppel should prevent the government from asserting before the bankruptcy court that a supplier contract is an enforceable contract. The article then discusses whether the supplier agreement should be treated as an enforceable bankruptcy contract and the impact of such treatment on a bankrupt supplier's ability to assign its supplier agreement to a buyer under the Bankruptcy Act and related issues such as: B. the Government Damages and Subsequent Liability and Recovery Rights.
Past and future of debt transfer
James M. Wilton und William A. McGee,74(1) 91-126 (Invierno 2018/2019).)
The bankruptcy theory of debt reclassification developed in four federal circuits uses multifactorial evidence derived from tax cases involving creditworthy corporations. Some aspects of these tests make no sense when applied to the debt of insolvent companies, and the US Treasury Department has found that the tests produce "inconsistent and unpredictable results" even for their originally intended purpose. The Ninth Circuit has now joined the Fifth Circuit in reviewing state law as a basis for deciding whether debt claims should be converted back into equity and dismissed in bankruptcy cases. This article examines both of these approaches and discusses the arguments for and against applying a federal or state decision rule to a debt downgrade. Drawing on precedent, legal and policy analysis from the United States Supreme Court, the article shows that state law provides the appropriate framework for deciding whether debt should be converted to bankruptcy capital, consistent with longstanding legal principles, and consistency between states and States offers. courts and a greater degree of predictability in relation to the enforcement of priority claims. The article predicts that the US Supreme Court will eventually rule on dividing circles in favor of a rule of law. In anticipation of such a decision, the article concludes with an overview of the range of legal issues and jurisdictional approaches to debt reclassification.
Bankrupt Oil & Gas Rights: Beware of the many dangers facing interest groups and lenders
Richard L. Epling, 74(1) 127-150 (Invierno 2018/2019)
Lenders, suppliers, pipelines, storage facilities and other entities that lend money or do business with the owner-lessor of oil and gas properties generally assume that their contractual relationships take precedence over the rights and claims of other participants in the production process . of hydrocarbons. These individuals often overlook the various state and local laws that affect definitions of personal and real estate property, requirements for perfection, and specific priorities that are given to sales representatives, vendors, and vendors in specific cases. Bankruptcy is the crucible for examining these conflicting rights and entitlements, and of late there have been some telling developments in several important court decisions.
How efficient is enough:Application of the concept of market efficiency in litigation Bradford Cornell and John Haut,74(2)417-434 (Spring 2019)
The notion of market efficiency has been adopted by courts in various contexts. In reality, markets can never be perfectly efficient or inefficient, but somewhere in between, depending on the facts and circumstances. Therefore, courts are faced with the problem of deciding how efficient is sufficient in a given legal context. Because market prices reflect the views of different market participants, courts are often willing to assume that a market is efficient as long as the appropriate criteria are met. However, these criteria are different for different types of cases, e.g. B. Securities Class Actions, Valuation Actions, and Bankruptcy.
Simple insolvency declaration for listed companies
J. B. Heaton,74(3)723-734 (Sommer 2019)
This article addresses the current limitations of market-based solvency tests and proposes a simple balance sheet solvency test for listed companies. This test is derived from an elementary algebraic relationship between the inputs used to calculate the solvency of the balance sheet. The solvency tests only require the assumption that the market value of the assets is equal to the sum of the market value of the company's debts and the market value of the company's shares. The solvency test is a ceiling on the total debt the company can have and remain solvent, or failing that, the minimum market capitalization the company must have if it is solvent at current stock prices. The advantage of the method – besides its ease of use – is that it enables companies in an insolvency situation to be identified on the balance sheet, even though not all of the company's liabilities – including contingent liabilities that are difficult to quantify – may be identified. As a result, the method enables companies with insolvent balance sheets to be identified that might otherwise escape detection. The method proposed here can identify bankrupt companies that hold assets and should not be paid out to shareholders as dividends or buybacks, identify stocks that brokers and investment advisors should treat as out-of-the-money call options that may be inappropriate investments, and can assist auditors in the process help identify public companies that are candidates for going concern ratings and other disclosures.
Why law firms fail
Juan Morley; 75(1): 1399-1440 (Winter 2019-2020)
Law firms don't fail, they collapse. Law firms like Dewey & LeBoeuf, Heller Ehrman, and Bingham McCutchen often go from good health to liquidation within months or even days. Hardly any large law firm has managed to restructure and survive its debts in insolvency. This pattern is fascinating because it is unparalleled among ordinary companies. Many companies go through long periods of financial difficulties and many even file for bankruptcy. But almost none collapse with the extraordinary strength and determination of law firms. Why?
Third Party Disclosures in Insolvency Proceedings: Should There Be Legal Reform?
Richard L. Epling;75(2): 1747-1768 (Spring 2020)
Third-party clearances, which can effectively act as non-debtor relief, have become an increasingly common part of recovery plans. There is no definitive Supreme Court case dealing with the legality and scope of such plan provisions, and the seven appellate courts dealing with the permitting issues either disagreed or posited various tests and legal standards to address the barrier of the " exceptional circumstances” set out to authorize such disclosures.
Can a lower offer for a debtor's assets pass as "better" because it saves more jobs than the higher offer?
Russel C. Silberglied,76(3): 817-840 (Sommer 2021)
Bidding process orders issued by bankruptcy courts generally state that bids that attempt to outbid a pursuit bid must be "bigger and better" than any competing bid. Offers were rated "better" despite having a lower "headline" dollar present value...
Laws that typically exclude the collection of third-party legal opinions in US commercial loan transactions
Gail Merel (Reportera), A. Mark Adcock, Robert W. Barron, Willis R. Buck, Jr., Jerome A. Grossman, Louis G. Hering, Timothy G. Hoxie, Andrew M. Kaufman, Reade H. Ryan, Jr . . . ., Philip B. Schwartz und Stephen C. Tarry,76(3): 889-926 (Sommer 2021)
As a condition of completing loan transactions, borrowers are often expected to have their attorneys provide lenders with written opinions on the enforceability and legality of the borrower's obligations in loan documents. Opinion leaders are not expected to deal with all applicable laws.
Delaware harmonizes Alternate Entity Series and UCC Section 9
normann m powell, 76(4): 1141-1156 (Herbst 2021)
Delaware Statutory Trusts, Limited Liability Companies and Limited Partnerships may form separate pools of assets to which creditors of the corporation as a whole or other series may not have access if certain legal requirements are met. Recently, many practitioners and commentators are concerned that such a series may not be among the entities that meet the UCC definition of 'person' and therefore may fall outside the scope of potential 'debtors' as defined by the UCC. Article 9 UCC.
Bankruptcy Elimination: A Summary Analysis
Securitization and Structured Finance Committee, ABA Business Law Section,77(4): 1105-1130 (Herbst 2022)
The Committee on Securitization and Structured Finance of the American Bar Association Business Law Section prepared this white paper to provide a synopsis of analysis of certain key legal concepts underlying the "Separation from Bankruptcy...
According to new bankruptcy filing data from Epiq Bankruptcy, bankruptcies of all types are up year-over-year in January of 2023. By the numbers, the total amount of filings in January clocked in at 31,087 which is up 19% from the 26,215 reported in January 2022.Have US bankruptcies increased? ›
But individual filings under Chapter 13 increased significantly. Annual bankruptcy filings in calendar year 2022 totaled 387,721, compared with 413,616 cases in 2021, according to statistics released by the Administrative Office of the U.S. Courts.What are the current bankruptcy statistics? ›
Bankruptcy filings including all chapters totaled 31,087, a 19% increase from the January 2022 total of 26,215. Commercial chapter 11 filings increased 70 percent to 257 in January 2023 from the 151 filings recorded in January 2022.How many people declared bankruptcy last year? ›
In 2022, there were 370,685 cases of personal bankruptcy filed nationwide in the United States. The number of personal bankruptcy cases has been declining in the U.S. since 2010.Can I buy a house the year after bankruptcies? ›
You'll need to wait 2 – 4 years depending on your loan type. For a Chapter 13 bankruptcy, you may be able to apply immediately or you may need to wait up to 4 years. FHA loans are a great option after bankruptcy because they allow you to buy a home with a lower credit score.How many years do you have to disclose bankruptcies? ›
Six years after bankruptcy
Details of your bankruptcy will be removed from your credit file which is used to calculate your credit score. All your creditors should have updated your credit file to list the debts which will be defaulting on or before the date of your bankruptcy.