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Singapore’s scheme of arrangement was very similar to that found in most Commonwealth countries. Over the last two decades the scheme has become a popular de facto debtor in possession regime in Singapore used to restructure the debts, both financial and trading, of insolvent companies. The courts have taken a leading role in this development. This success story has an unexpected twist recently. As part of its strategy to develop Singapore into an international centre for debt restructuring, the Government accepted the recommendations of a law review committee to bring in significant elements of the US Chapter 11: an automatic, wide-ranging moratorium, cross-class cram down, super priority lien and pre-packaged schemes. It will be argued that due to the significant differences between the insolvency laws of Singapore and US and the different conceptual framework of the scheme and Chapter 11, there will be a period of uncertainty or even instability while the courts work out ways to harmonise the two different bodies of law. This bold experiment has relevance beyond Singapore. It has close parallels in UK’s imminent reforms and, to a lesser extent, the European draft directive on restructuring.

Do prior lending relationships result in pass‐through savings (lower interest rates) for borrowers, or do they lock in higher costs for borrowers? Theoretical models suggest that when borrowers experience greater information asymmetry, higher switching costs, and limited access to capital markets, they become locked into higher costs from their existing lenders. Firms in Chapter 11 seeking debtor‐in‐possession (DIP) financing often fit this profile. We investigate the presence of lock‐in effects using a sample of 348 DIP loans. We account for endogeneity using the instrument variable (IV) approach and the Heckman selection model and find consistent evidence that prior lending relationship is associated with higher interest costs and the effect is more severe for stronger existing relationships. Our study provides direct evidence that prior lending relationships do create a lock‐in effect under certain circumstances, such as DIP financing.

In the past insolvency resolution process included operations of simultaneous Acts. This was changed and several insolvency laws were consolidated resulting in a single law for insolvency and bankruptcy unlike any other previous laws, These include the Sick Industrial Companies Act, 1985, the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Recovery of Debt Due to Banks and Financial Institutions Act, 1993, and the Companies Act, 2013. Due to this, some cases were there pending for years. This code is the unification of all these laws which help do a robust mechanism to revive a company if it had to see the fate of insolvency. This code provides genuine rehabilitation and restructuring of the company. The IBC process, like the Australian and UK administration procedures, is not a debtor in possession procedure. Instead, a third-party insolvency practitioner (the Resolution Professional) takes control of the corporate debtor and, within strict statutory time frames, formulates a restructuring plan that creditors need to approve. The IBC process gives substantial power to financial creditors, both domestic and foreign.

This chapter examines fiduciary duties in bankruptcy and insolvency, focusing on the bankruptcy trustee’s duties, which are triggered by virtue of appointment in a case. It first provides a background on bankruptcy law in order to elucidate the doctrines and rules affecting fiduciary responsibilities in bankruptcy, citing a number of relevant provisions in the Bankruptcy Code. It then considers the fiduciary, non-fiduciary, and anti-fiduciary obligations of the trustee under the Bankruptcy Code before discussing the fiduciary duties of care and loyalty. In particular, it highlights bankruptcy-related issues raised by the duty of loyalty with respect to secured creditors, priority unsecured creditors, general unsecured creditors, and debtors. It also explores the byzantine protective remedies available to trustees should there be a breach of fiduciary duty and concludes with an analysis of miscellaneous additional duties of the trustee in insolvency, as well as the unique challenges the debtor-in-possession (DIP) faces with its duty of loyalty. The chapter suggests that the Bankruptcy Code has many safeguards designed to confront conflicting creditor incentives, both against the DIP and in insolvency, that help fill the gaps left by reliance upon fiduciary duty law alone.

Several countries and regions around the world, including Singapore, the United Kingdom, and the European Union are amending their restructuring framework to implement a pre-insolvency mechanism that includes most of the features existing in the US Chapter 11. However, unlike what happens in the United States, where unsuccessful reorganizations lead to Chapter 7 liquidations, companies using this ‘de facto Chapter 11’ (DFCH11) will be still allowed to use formal reorganization procedures. This paper argues that, while the rise of the DFCH11 is not necessarily undesirable provided that various protections are put in place, jurisdictions implementing this restructuring tool need to adapt their formal insolvency framework to this new era of ‘pre-insolvency law’. Otherwise, some inefficiencies can be created from the lack of coordination between insolvency and pre-insolvency law, since non-viable firms as well as viable businesses managed by the wrong people can opportunistically delay the commencement of a liquidation procedure even when it is the most desirable outcome for the creditors and society as a whole.

Mit der Einführung des ESUG wurde das Insolvenzrecht Deutschlands im Jahr 2012 reformiert. Das ESUG eröffnet neue Sanierungswege, z. B. das eigenverwaltete Schutzschirmverfahren vor der Insolvenz und die Eigenverwaltung während des Eröffnungsverfahrens. Insgesamt beantragen weiterhin nur einige hundert Unternehmen diese Verfahren: Das entspricht 1 bis 2 % aller insolventen Unternehmen. Die Nutzung steigt ab einer Unternehmensgröße von 10 Mitarbeitern und mit dem Unternehmensalter deutlich an. Nur noch jeder zehnte Eigenverwaltungsantrag wird vom Gericht abgelehnt, das bietet den Unternehmen mehr Planungssicherheit für Sanierungen. With the introduction of the ESUG law, German insolvency legislation was reformed in 2012. It offers new proceedings for enterprise re-organisation, both before insolvency and between the application for insolvency and the start of the insolvency trial, e.g. with debtor in possession in both periods. However, still only a couple of hundred enterprises apply for proceedings with debtor in possession every year: This equals 1 or 2 % of all insolvent enterprises. The use of these new proceedings increases with enterprise size (from 10 employees onwards) and with enterprise age. The courts refuse only every tenth application for self-administration proceedings, thus offering insolvent enterprises more planning security for their company re-organisation.

Singapore’s statutory provisions on scheme of arrangement are very similar to that found in most Commonwealth countries. Over the last two decades the scheme has become a popular tool to restructure the debts, both financial and trading, of insolvent companies. The courts have taken a leading role in this development and in the process have laid down principles and rules to augment the bare statutory provisions. The scheme has become a de facto debtor in possession regime in Singapore. This success story has an unexpected twist recently. As part of its strategy to develop Singapore into an international centre for debt restructuring, the Government has accepted the recommendations of a law review committee to bring in significant elements of the US Chapter 11. A draft Bill published for consultation included an automatic, wide-ranging moratorium, cross-class cram down, super priority lien and pre-packaged schemes. It will be argued that due to the significant differences between the insolvency laws of Singapore and US and the different conceptual framework of the scheme and Chapter 11, there will be a period of uncertainty or even instability while the courts work out ways to harmonise the two different bodies of law. This bold experiment has relevance beyond Singapore. The developments have close parallels in UK’s recent consultation on reforming her insolvency law framework and, to a lesser extent, the European draft directive on restructuring. The Singapore story of injecting US Chapter 11 into the Commonwealth scheme is thus deserving of close attention while it unfolds.

Like many other financial institutions, Bahrain-based Arcapita Bank operating in the United States was hit hard by the Eurozone crisis that followed the global financial crisis. Unable to restructure its $1.1 billion debt obligations due in March 2013, the bank decided to file for Chapter 11 protection in the US Bankruptcy Court. This case study introduces Arcapita and its operations, explains the US Chapter 11 and its important aspects like debtor in possession (DIP) financing, highlights the most significant episodes of the Arcapita case, and concludes with important lessons embedded in the proceedings. The case as a precedent as well as Chapter 11 as the basis for a corporate insolvency law in Islamic finance is also discussed.

The 2008 financial crisis was followed by a global economic downturn, a credit crunch, and a reduction in cross-border lending, trade finance, and foreign direct investment, which adversely affected businesses around the world. The consequent increase in the number of firm insolvencies in the corporate sector highlights the need for commercial bankruptcy laws to liquidate efficiently unviable firms and reorganize viable ones, so as to maximize the total value of proceeds received by creditors, shareholders, employees, and other stakeholders. The authors summarize the theoretical and empirical literature on bankruptcy design, discuss the challenges of introducing and implementing bankruptcy reforms, and present examples of how policymakers are trying to take advantage of the current economic downturn as an opportunity to engage in meaningful reform of the bankruptcy process. They also review the main principles of efficient insolvency laws and bankruptcy procedures. Copyright 2012, Oxford University Press.

In October 2009, the Financial Services and the Treasury Bureau of the Hong Kong Government published a consultation paper to review corporate rescue procedure with the aim of reforming key issues relating to corporate rescue. This paper compares the proposed reform in Hong Kong and the debtor-in-possession concept of the United States of America in Chapter 11 corporate rescue, and seeks to identify the reasoning behind the differences.

Two recent cases decided under the Companies’ Creditors Arrangement Act highlight some potential snares in coordinating U.S. and Canadian insolvency proceedings. In both cases, the Canadian debtors had guaranteed the obligations of their U.S. affiliates, in one case under a secured loan and in the other under a debtor in possession loan. These cases illustrate how the Canadian courts are dealing with the issue of cross-border guarantees and the extent to which they are concerned that the interests of Canadian unsecured creditors be considered.

The US Bankruptcy Code’s chapter 11 procedure is both in practice and conceptually the most important insolvency procedure worldwide. Many countries, including the Netherlands, look at Chapter 11 for inspiration in revising their own insolvency laws. Chapter 11 is, however, itself up for revision. On December 4, 2014, the American Bankruptcy Institute (ABI) issued breaking news for the restructuring and insolvency community in the USA when it presented its Final Report and Recommendations on the Reform of Chapter 11. This article discusses the most principled recommendations that will also be of the most relevance for legislatures and policy makers drawing inspiration from Chapter 11. First of all, the recommendation is discussed for introducing the figure of a so called ‘estate neutral’ as a supplement to the debtor in possession model. Secondly, the introduction of significant restrictions on 363 sales; selling all or nearly of the assets. Restrictions deal both with timing and creditor involvement. As a third recommendation, we single out the introduction of a so-called ‘redemption option’. This option seeks to restore in part the balance between secured and unsecured creditors by giving ‘the immediate out of the money creditors’ a claim on encumbered assets equal to a redemption option. Finally, most novel and most interesting from a company law perspective, is the introduction of an Equity Retention Plan for Small and Medium sized Enterprises (SME’s). The plan seeks to strike a balance between protecting the statutory order of distributions which would normally prevent a distribution to shareholders on the one hand and providing an incentive to shareholders necessary for the successful reorganisation of the company to remain involved on the other. This recommendation thereby provides an exception to the Absolute Priority rule, which usually has as the effect of wiping shareholders out in case of insolvency.

The ability to obtain financing is a critical element in the attempt to successfully reorganise a firm which has declared Chapter 11 bankruptcy. Debtor-in-possession (DIP) financing is one method which has become increasingly popular in recent years. This paper examines whether receiving DIP financing is related to successful reorganisations and a shortened duration under Chapter 11 bankruptcy proceedings. Evidence on these two research questions may then be extended to infer whether or not DIP financing is likely to reduce the costs of bankruptcy. The findings are of interest to managers of firms which are experiencing financial difficulty and their shareholders, as well as current and potential lenders and regulators.

German Abstract: Am 12.3.2014 publizierte die EU-Kommission eine Empfehlung fur einen neuen Ansatz im Umgang mit unternehmerischem Scheitern und Unternehmensinsolvenzen (C(2014) 1500 final). Der vorliegende Aufsatz setzt sich kritisch mit dieser Empfehlung auseinander. Eine Harmonisierung der mitgliedstaatlichen Insolvenzrechte ist zwar im Grundsatz zu begrusen. Die spezifischen Regeln, die in der Empfehlung vorgeschlagen werden, sind jedoch mangelhaft. In dem Aufsatz werden die Kernelemente eines neuen Eigenverwaltungsregimes entwickelt, das effiziente Unternehmensrestrukturierungen in Europa viel effektiver fordern wurde als die Vorschlage in der EU-Empfehlung. Vor diesem Hintergrund zeigt der Aufsatz, wie insbesondere der deutsche Gesetzgeber auf diese Vorschlage reagieren sollte. English Abstract: On 12 March 2014, the European Commission published a recommendation on a new approach to business failure and insolvency (C(2014) 1500 final). This paper critically reviews the Commission’s recommendation. While harmonization efforts regarding insolvency systems in Europe are to be welcomed in principle, the specific rules suggested in the recommendation suffer from serious defects. The paper develops the core elements of a new debtor in possession restructuring regime that would be much more effective in promoting efficient business restructurings in Europe than the Commission’s proposals. Against this background, the paper suggests how the German lawmaker in particular should react to these proposals.

As to whether to defend their fee application under 11 U.S.C. § 330, professionals may well be damned if they do and damned if they don't. This article analyzes this statutory conundrum, surveying recent developments and issues for professionals employed under § 330 of the Bankruptcy Code. Topics discussed include (1) the various methods courts use to define "reasonable, actual, and necessary" compensation; (2) awards for the costs incurred while defending a fee application; (3) fee enhancements, including the Fifth Circuits cases on CRG Partners Grp., L.L.C. v. Neary (In re Pilgrim’s Pride Corp.) and ASARCO L.L.C. v. Jordan Hyden Womble Culbreth & Holzer, P.C. (In re ASARCO L.L.C.); and (4) post-judgment interest accruing during the defense of a fee award. The author argues that the Fifth Circuit has been correct to uphold decades of precedent allowing fee enhancements after the Supreme Court decision in Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542 (2010), and that fees incurred in the defense of fee applications should be recoverable.

This paper is an introductory survey of bankruptcy and insolvency theory and practice relating to the introduction of Shari'ah principles into secular bankruptcy and insolvency regimes in both jurisdictions that incorporate the Shari'ah, to some extent, into the secular law of the jurisdiction and purely secular jurisdictions. The paper first summarizes some of the Shari'ah principles that are applicable in the bankruptcy and insolvency context. Thereafter, the paper notes the general nature of the secular bankruptcy and insolvency regimes currently in use and summarizes some current practices that are of relevance in the distressed debt, bankruptcy, insolvency, reorganization, restructuring and workout markets, particularly in jurisdictions that have adopted or may adopt a reorganization methodology (such as Chapter 11 or the UNCITRAL model insolvency law). Finally, the paper summarizes certain aspects of the bankruptcy proceeding involving the East Cameron oil and gas sukuk as an example of a secular bankruptcy proceeding involving a Shari'ah-compliant instrument and transaction.

Do prior lending relationships result in pass-through savings (lower interest rates) for borrowers, or do they lock in higher costs for borrowers? Theoretical models suggest that when borrowers experience greater information asymmetry, higher switching costs, and limited access to capital markets, they become locked into higher costs from their existing lenders. Firms in Chapter 11 seeking debtor-inpossession (DIP) financing often fit this profile. We investigate the presence of lock-in effects using a sample of DIP loans. We first account for selectivity bias by using the inverse mills ratio form a first stage. Then, in a second stage, we jointly estimate the relationship between loan price and non-price terms accounting for selectivity bias. We find that the existence and intensity of prior lending relationships are associated with higher interest costs, longer maturities, and smaller DIP loans. Taken together, our study provides direct evidence that prior lending relationships do create a lock-in effect under certain circumstances, such as DIP financing.

Hong Kong lacks a statutory corporate rescue regime, despite repeated attempts at legislative reform beginning with the the Law Reform Commission’s 1996 recommendations. But each attempt to pass a version of so-called “provisional supervision” failed, mainly due to irreconcilable views of diverse stakeholders on the treatment of labour claims, and in particular on the feasibility of full satisfaction of labour claims as a precondition to entering provisional supervision. In October 2009 the government of Hong Kong tried once again to bridge the differences with proposals set forth in a consultative paper entitled, Review of Corporate Rescue Procedure Legislative Proposals, issued by the Financial Services and Treasury Bureau (FSTB). On 22 January 2010 at the University of Hong Kong, the authors convened a symposium of stakeholders to discuss and comment on the consultative paper. Underscoring the importance of corporate rescue legislation, stakeholders responded enthusiastically. and endeavored to overcome historical impasses with fresh ideas on the treatment of labour claims. The attendees also welcomed a proposal by the authors, that Hong Kong consider adopting a “hybrid” debtor-in-possession (“DIP”) approach to corporate reorganization that would allow management in certain cases and with creditor approval to continue administering the debtor during the statutory rescue process. Following the symposium, the FSTB invited the authors to draft a paper discussing the various proposals on the treatment of labour claims that emerged at the symposium, and to provide a more detailed discussion of the hybrid DIP approach. In this article, submitted to the Hong Kong Law Journal, the authors seek to relay to a broader audience the comments and proposals they initially expressed in their submission to the FSTB. This paper reviews the history of corporate rescue legislation reform attempts in Hong Kong, then discusses the merits and demerits of various proposals for dealing with labour claims, and finally presents and discusses the merits of a hybrid debtor-in-possession approach to corporate rescue. The authors argue that without a DIP option, many companies in distress will not avail themselves of provisional supervision, and that, in many if not most cases, a punitive approach to management is not merited and thwarts the intended goal of a corporate rescue regime.

Debtor-in-possession (DIP) financing is one of the most important building blocks of a Chapter 11 bankruptcy case. The recent economic downturn, however, has frozen the DIP financing market. Absent the financing necessary to reorganize, many companies will be forced to liquidate. Who will fill the void in DIP financing as banks exit the market? This note seeks to explore alternative options - local banks, the government, and private equity or hedge funds - that may fill the vacuum left by the banks, and the risks and rewards associated with DIP financing. As these alternate institutions go forward, the landscape of DIP financing may forever change, with not only increasing risk of loan default and inflationary concerns, but also the opportunity to profit.

This article addresses one aspect of the law regarding the satisfaction of judgments: when a creditor is determined to have a lien on property of the debtor. The unnecessary cumbersomeness of the present system, which limits the ability of creditors to promptly obtain a legally cognizable interest in specific property, hampers creditors in preventing the debtor's use, sale, or hypothecation of property that could be used to satisfy their debts. This is particularly true of intangible property and property where federal law or the law of sister states controls transfers. Not only do judgment creditors face the risk that the debtor will voluntarily dissipate or transfer assets, but also the risk that they will be defeated by subsequent parties who deal with the debtor, become creditors, and are able to find assets. Possibly the most pernicious of those subsequent creditors are the federal and state taxing authorities. The tax lien, once filed, locks in all personal and real property of the debtor. Bankruptcy also presents a serious difficulty for the judgment creditor. If the debtor files for bankruptcy before the creditor can locate personal property of the debtor, the creditor (despite having obtained a judgment) has no greater priority than all of the unsecured creditors of the debtor. If the judgment creditor locates personal property and obtains a lien on that property shortly before the date that the debtor files a Bankruptcy petition, the creditor's lien can be avoided as a preference. Even where a debtor files a Chapter 11 petition and maintains control of the business as a debtor in possession, the debtor can still use the preference section to avoid the creditor's lien.This article proposes that the computer systems currently being introduced to automate court systems around the country serve as the vehicle for the implementation of major reforms in the substantive and procedural law regarding judicial liens. The most significant change would involve the creation of statewide judgment liens on virtually all of the property of the debtor. This article will explore how the proposed system might deal with various types of property and particular third parties, and how to solve some of the transitional problems involved in adopting such a system. The changes proposed are incorporated in a Model Judgment Lien Act (MJLA) which is set forth in the Appendix of this article. It is hoped that the MJLA makes clear precisely how the rules discussed in the article would operate.

In 2000, Japan enacted the Law of Recognition and Assistance for Foreign Insolvency Proceedings (LRAFIP) which adopted almost all the provisions of the UNCITRAL Model Law on Cross-Border Insolvency, and abolished the notorious territorialism contained in Japanese insolvency laws for so many years. Since the LRAFIP became effective in 2002, only two cases have been filed (one by a foreign trustee and the other by a debtor in possession), calling for recognition and assistance under the LRAFIP.

In a study of the division of professional fees in 74 large, public company bankruptcy cases concluded from 1998 through 2003, we find that 79% of court-awarded fees are awarded for services rendered directly to the debtor in possession. Only 20% are awarded for services rendered to creditors committees, only one half of one percent are awarded for services rendered to equity committees, and less than one percent are awarded for services rendered by court appointed professionals. Fifty-three percent of the fees were awarded to attorneys, 42% to financial advisors, 5% to accountants, and a fraction of 1% to all other professions combined. Of the 53% that went to attorneys, more than two thirds went to bankruptcy attorneys and less than one third went to "special" or "ordinary course" counsel performing nonbankruptcy work. We estimated regression models for the fees of each of five types of professionals: (1) attorneys, (2) DIP bankruptcy attorneys, (3) DIP special attorneys, (4) financial advisors, and (5) DIP financial advisors. Debtor size, case duration, and the number of attorney firms working were the principal determinants of attorneys fees. But those factors were only weak determinants of financial advisors' fees. The strongest determinants of financial advisors' fees were court (the Delaware and New York courts awarded more to financial advisors) and the trend over time. Over the period of our study, the fees of financial advisors increased at the rate of 25% per year. Courts did not award higher fees to financial advisors in cases where the debtor sold its business or a controlling interest in its business. By comparing the results of our study with the results of LoPucki and Whitford's study of reorganizations in early 1980s, we find a sharp increase in the employment of financial advisors by creditors' committees and a sharp decline in the employment of professionals by equity committees. We found that several factors thought to cause DIP bankruptcy attorneys fees to be higher in fact did not. They include whether the DIP lead attorneys were a New York firm, whether the DIP lead attorneys were from a city distant from the courts, and the hourly rates charged by the attorneys.

Courts have repeatedly stated that equitable subordination is a compensatory remedy. This view is demonstrably mistaken; if equitable subordination is compensatory, only injured creditors, and not trustees or debtors in possession, would have Constitutional standing to bring equitable subordination actions. Rather, equitable subordination is quasi-punitive remedy akin to unjust enrichment, which looks to the actions of the inequitable party, not the harm caused. The proper compensatory remedy for injured creditors is direct tort suits against the inequitable creditor. Equitable subordination should be granted only when an injured creditor cannot bring a direct action against the inequitable creditor or when a creditor has engaged in inequitable behavior in the bankruptcy process itself. A quasi-punitive view of equitable subordination could resolve the problem of Constitutional standing for trustees and DIPs. More significantly, if equitable subordination is a punitive remedy, it changes litigation leverage and implies different limits on the action, particularly in regard to the liability of transferees of the inequitable party.

In the 1980s and early 1990s, many observers believed that the American corporate bankruptcy laws were desperately inefficient. The managers of the debtor stayed in control as "debtor in possession" after filing for bankruptcy, and they had the exclusive right to propose a reorganization plan for at least the first four months of the case, and often far longer. The result was lengthy cases, deteriorating value and numerous academic proposals to replace Chapter 11 with an alternative regime. In the early years of the new millennium, bankruptcy could not look more different. Cases proceed much more quickly, and they are much more likely to result in auctions or other sales of assets than in previous decades. This transformation is due in part to a change in the major corporations that file for bankruptcy. Rather than industrial, bricks-and-mortar firms, many of the new debtors are knowledge-based firms with transient assets. Much more important, however, has been the adjustments creditors have made in an effort to reassert control in bankruptcy. In this Article, I focus on the two most important contractual developments: lenders' use of debtor-in-possession financing agreements as a governance lever; and the so-called pay-to-stay arrangements which give key managers bonuses for meeting specified performance goals (such as quick emergence from bankruptcy or the sale of important assets). Both of these developments can be seen as adjustments by creditors to counteract bankruptcy's interference with the shift in control rights that would ordinarily occur at the time of financial distress. As I have discussed elsewhere, chapter 11 functioned somewhat like an antitakeover device in the 1980s. Creditors have now neutralized its effects. Of the two new contractual approaches, pay-to-stay agreements have proven much more controversial, prompting heated complaints about excessive managerial pay in cases like Enron, Polaroid and Kmart. The controversy is similar in obvious respects to the recent complaints about performance-based pay outside of bankruptcy. I argue that pay-to-stay agreements are more defensible, but also argue that bankruptcy compensation should be constrained in several ways. Although the use of DIP financing agreements to shape bankruptcy cases has not received nearly so much attention, the effect is even more profound. I argue that the use of these agreements to control Chapter 11 cases is, on the whole, a beneficial development. But I also argue that some of their terms - such as provisions protecting pre-petition loans by the DIP lenders and the use of DIP agreements to lock up control - should be subject to careful judicial scrutiny.

This article presents the findings of an empirical study of professional fee and expense awards by United States Bankruptcy Courts in 48 large public company bankruptcy cases concluded from 1998 through the first half of 2002. Data was gathered from fee applications and orders in the courts files. Using that data together with case and company data from the Bankruptcy Research Database, the authors constructed regression models of the determinants of (1) the amounts of professional fees and expenses awarded by case and (2) the amounts of debtor-in-possession bankruptcy attorneys fees awarded by case. Two determinants dominate both models: the value of the reorganizing firm's assets and the length of time the case remains pending. Two additional factors contribute to determining the amount of professional fees and expenses, but not debtor in possession bankruptcy attorneys fees: the number of professional firms working in the bankruptcy case and whether the case was in the Delaware bankruptcy court. The ratio of fees and expenses to firm size was subject to a scale effect. As the size of the case increased, the ratio of fees to expenses declined. For the 48 cases studied, total fees and expenses were 1.4% of assets reported on the bankruptcy petition. The average ratio of fees and expenses to assets was 2.2%, but removal of a single outlier reduced it to 1.9%. Controlling for firm size, case duration, and the number of professional firms working, fees were 32% higher in Delaware cases. But controlling only for firm size, the significance of this finding disappeared. Fee cuts were generally small - exceeding 4% of the amounts applied for in only 11% of the cases. The mean fee cut varied significantly by court. Delaware cuts averaged 0.7%, New York 4.5%, and Other Courts 2.3%. The differences in fee cuts among courts was significant, but fees were not significantly lower in cases with larger fee cuts. Based on a comparison of the data gathered in this study with the data gathered by Weiss, inflation-adjusted professional fees and expenses awarded in large, public company reorganizations have fallen by about 57% since the 1980s. Controlling only for firm size, the difference is statistically significant. The decline in fees appears to be associated with the decline in case duration that occurred during the period.

Bankruptcy Code section 365 affords a debtor in possession broad power to assume and assign executory contract rights notwithstanding most nonbankruptcy law restrictions on assignment of those rights. As an exception to this general power, a debtor in possession can neither assume nor assign executory contract rights if, under "applicable law," such rights are not assignable to a third party. Under patent common law, a patent licensee may not transfer its rights unless the terms of the license affirmatively permit transfer or the licensor otherwise consents. This patent common law rule of interpretation serves as "applicable law" in the patent licensee's bankruptcy case, and appears to bar the debtor in possession from exploiting such rights without the licensor's consent. Although the relevant statutory language is clear, the federal circuit courts of appeal are divided on whether a patent licensor can block a debtor in possession from assuming for its own use patent license rights that under "applicable" patent law it cannot assign to a third party. The article looks beyond the justifications courts have given for their conflicting decisions and recasts them as incomplete responses to problems of inefficiency.

Survey of United States Court of Appeals for the Fifth Circuit’s bankruptcy decisions from July 1, 1982, through June 30, 1983. The bankruptcy cases handed down by the Fifth Circuit this survey period serve the practitioner in a variety of ways. In particular, many ambiguities within the basic framework of the Bankruptcy Code were clarified. Furthermore, the Fifth Circuit came forward with several decisions that will serve as valuable road maps to help guide the practitioner through the intricacies of the Code. The survey includes several topics regarding discharge and the prepetition sheltering of assets, and debtor in possession and misuse of the Trustee’s avoidance power.