Chapter 11 at the School of Subchapter V: Part II

SSRN Electronic Journal · 2024-01-01

Chapter 11 at the School of Subchapter V: Part I

SSRN Electronic Journal · 2024-01-01

Fee-Shifting in Bankruptcy

SSRN Electronic Journal · 2021

• Political Science
• Law
• Political Science

This Article examines attorney fee-shifting practices in bankruptcy from theoretical, historical, caselaw, statutory, empirical and comparative per-spectives. Although the Supreme Court has insisted that the American Rule remains the applicable background principle in insolvency cases as else-where, insolvency law, for sound equitable and systemic reasons, has always rejected strict application of the American Rule. Fee-shifting among the parties has been, and remains, pervasive in bankruptcy cases. Against this background, the Supreme Court’s position has led to anomalous and unto-ward results in discrete areas where the American Rule continues to apply. This Article argues for a forthright rejection of what little remains of the American Rule in bankruptcy and proposes a modified English Rule giving bankruptcy courts discretion over the award of attorney’s fees to remedy the remaining problems caused by the Supreme Court’s unjustified assumption that the American Rule is the correct background principle in the insolvency context. I go on to identify a set of non-exclusive factors that properly inform the exercise of the bankruptcy court’s discretion over the award of fees. Interestingly, the United Kingdom, starting from the tradition of the English Rule, has created a discretionary fee-shifting regime applicable to insolvency cases that mirrors the discretionary approach advocated here. Whether one’s legal system comes from a tradition starting with the English Rule or the American Rule, the realities of insolvency practice impel both the English and American systems towards a court-supervised discretionary fee-shifting regime in the bankruptcy arena.

Corporate Governance, Bankruptcy Waivers and Consolidation in Bankruptcy

SSRN Electronic Journal · 2019-08-17 · 1 citations

Corporate law formalities that impede effective bankruptcy relief are properly overridden in bankruptcy. Those formalities generally count for little outside bankruptcy and should not hamstring a bankruptcy court’s ability to afford effective relief consistent with the underlying policies of the Code. Nevertheless, recent scholarship and caselaw in bankruptcy, reflecting a contract uber alles zeitgeist has given too much credence to both entity partitions that blink the reality of how firms actually operate and contractual barriers to voluntary bankruptcy relief baked into corporate charters. Bankruptcy law should refocus on honoring substance over form. In doing so, corporate formalities will properly yield to underlying substantive bankruptcy policy. The limited role of corporate formalities in the event of insolvency should be factored into market expectations surrounding asset securitization, including the frailty of both entity partitions within corporate groups and bargained-for restrictions on entities’ access to bankruptcy relief.

Doing Equity in Bankruptcy

SSRN Electronic Journal · 2017-01-01

This Article argues that consistent with the Code’s text and policy, injunctions or other forms of equitable relief should be presumptively treated as “claims,” even if nonbankruptcy law does not permit the enjoined party to satisfy the injunction by the payment of money. This presumption, however, should be rebuttable. No categorical rule can determine when equitable remedies should be monetized and discharged. Consistent with a chancery tradition of flexibility and discretion in the employment of equitable remedies stretching back for centuries, however, a balancing approach can appropriately determine the availability of equitable relief. The Article identifies factors to be weighed in this balancing process. When the factors tilt against equitable relief then monetization and discharge is the correct result absent compelling countervailing nonbankruptcy policies. Part I discusses the availability of equitable relief under nonbankruptcy law, including the tradition of discretion that historically governs the availability of such relief. It also notes the increasing availability of such relief under both statute and common law in the past 30 years, a trend that only heightens the importance of getting the treatment in bankruptcy right. Part II critiques the confused state of the authorities regarding treatment of equitable remedies in bankruptcy and argues that the existing Code, properly construed, carries forward nonbankruptcy tradition by conferring discretion on bankruptcy judges to monetize nonbankruptcy entitlements to equitable relief by weighing bankruptcy as well as nonbankruptcy equities. Part III discusses the special insolvency-related factors that should govern that exercise of discretion in bankruptcy.

Ethics for Examiners

Fordham law review · 2016-01-01

“Litigate or settle” is the choice generally available to disputants in American courts, including federal bankruptcy courts. In authorizing examiners, however, the Bankruptcy Code provides one very specific procedural device peculiarly suited to introduce inquisitorial process into a chapter 11 case. Until recently, examiners were seldom employed, and even when employed were not a true inquisitorial alternative to “litigate or settle.” Rather, examiners would determine the legal sufficiency of a disputed claim but not opine on the merits or undertake to resolve factual disputes. In "A Third Way: Examiners As Inquisitors," 90 Am. Bankr. L. J. 59 (2016), I identify and assess an emerging new approach to the bankruptcy examiner’s role. While not quite fully embracing an inquisitorial alternative to traditional bankruptcy dispute resolution, In re Tribune Co. and a series of post-Tribune investigations show that inquisitorial methods may be productively employed in certain large bankruptcy cases to resolve complex legal disputes. It may well be that chapter 11 examiners are the perfect persons to launch the inquisitorial experiment in American civil process. This Symposium Article discusses the professional responsibility implications of conducting an inquisitorial-style bankruptcy examination. The inquisitorial bankruptcy examiner faces unique ethical quandaries and considerations, and requires a code of ethics tailored to his role if he is to fully achieve the promise of improving chapter 11 through the introduction of inquisitorial investigative methods. This Article points the way towards developing guidelines to regulate the conduct of examiners that mitigate real, potential and perceived abuses, and further the legitimacy of such investigations.

A Third Way: Examiners as Inquisitors

SSRN Electronic Journal · 2015-04-01

“Litigate or settle” is the choice generally available to disputants in American courts, including bankruptcy courts. In authorizing examiners, however, the Bankruptcy Code provides one very specific procedural device peculiarly suited to introduce inquisitorial process into a chapter 11 case. Until recently, examiners were seldom employed, and even when employed were not a true inquisitorial alternative to “litigate or settle.” Rather, examiners would determine the legal sufficiency of a disputed claim but not opine on the merits or undertake to resolve factual disputes. The Tribune chapter 11 case, however, took a different approach to the examiner’s role. While not quite fully embracing an inquisitorial alternative to traditional bankruptcy dispute resolution, Tribune and a series of post-Tribune investigations have shown that inquisitorial methods make sense in certain large bankruptcy cases involving complex legal disputes. It may well be that chapter 11 examiners are the perfect persons to launch the inquisitorial experiment in the United States.\n Part I introduces the thesis. Parts II and III set out the historical and comparative law inquisitorial alternatives to adversary litigation looking at English Chancery, European civil law systems and pre-Tribune examiner practices in US bankruptcy law. Parts IV and V contain the qualitative empirical analysis starting with a detailed look at Tribune and then discussing the small universe of post-Tribune cases in which examiners have been appointed. Part VI is the policy analysis of when and how Tribune-style inquisitorial examinations should be conducted.

The Best of All Possible Worlds? - A Rejoinder to Justice Liu

SSRN Electronic Journal · 2014-01-01

This Rejoinder defends the thesis of Opinions First -- Argument Afterwards by addressing criticisms raised by Justice Goodwin Liu in his forthcoming article How the California Supreme Court Actually Works: A Reply to Professor Bussel, 61 UCLA Law Review (2014).

The Problem with Preferences

SSRN Electronic Journal · 2014-01-01

This paper critiques Brook Gotberg’s recent proposal to reform preference law by creating a new safe harbor for preferences in chapter 11 while repealing certain existing preference defenses in chapter 7. The proper path of reform in this area would preserve preference recovery as a feature of chapter 11 reorganization law while raising the monetary limits on minimum recoveries, restricting financial contract safe harbors and bolstering ordinary trade creditor defenses across both chapter 11 and chapter 7.

Opinions First - Argument Afterwards

SSRN Electronic Journal · 2013-12-05

For twenty-five years, the California Supreme Court has operated under a bizarre internal operating procedure that requires majority opinions to be written and agreed to prior to oral argument. This procedure squanders and demeans the parties’ formal opportunity for appellate argument, is inconsistent with traditional common law appellate process, and violates the state and federal Constitutions.