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Navigating a tightening economic cycle--characterized by prolonged high interest rates and uncertainty about future rate cuts--requires care and foresight. In the current financial climate, companies tend to accrue substantial net [...]

TABLE OF CONTENTS I. Introduction 342 II. The Conventional Wisdom 345 III. Two Kinds of Control Rights 349 A. Investment-Backed Control Rights 349 B. Spillover Control Rights 352 1. Franchises [...], Control rights are rights to control how a debtor uses certain resources, such as rights to foreclose on collateral, terminate a contract, or prevent assignment of contractual rights. Law and economics scholars have mused whether bankruptcy law should supplant control rights, but they assumed that all control rights share the same goal: to protect a party's investment in a company. This Article rejects that assumption. It shows that there are two kinds of control rights that bankruptcy law should treat differently. One kind--what this Article dubs "investment-backed control rights"--aims to protect a party's investment in the debtor. Since the debtor is best positioned to put its assets to their highest and best uses, the debtor should be able to convert investment-backed control rights from property rules to liability rules. The other kind--what the Article calls "spillover control rights"--is designed to protect a counterparty's enterprise from how a debtor uses a resource. Franchisor-franchisee, sports league-team, and partnership-partner relationships illustrate these dynamics. Since the right holder has the incentives and knowledge to determine how to optimally use that resource, bankruptcy law should respect the property-rule remedies used to enforce spillover control rights. This Article reveals that these different control rights create their own sets of complementarities at different levels of an organization. Traditional law and economics accounts call for courts to maximize the debtor's, and only the debtor's, resources. This Article suggests bankruptcy law should have a broader scope: it should aim to preserve the complementarities that investment-backed and spillover control rights generate.

INTRODUCTION 550 I. THE PROBLEMS WITH MODERN CHAPTER 11 554 II. DIP FIDUCIARY DUTIES 557 A. Corporate Fiduciary Duties 558 B. Fiduciary Duties in Bankruptcy 563 III. AN APPLIED ACCOUNT [...], The board's fiduciary duties are the bedrock of corporate law. Bankruptcy trustees also owe fiduciary duties to the "bankruptcy estate." But corporations in bankruptcy rarely worry about fiduciary duties, even those corporations in chapter 11 reorganization cases, when the company is supposed to act as if it were the bankruptcy trustee. At the same time, modern chapter 11 is increasingly seen as "problematic." Opportunism runs unchecked. This Article argues that these two points are directly connected: the underdevelopment of a corporate debtor's fiduciary duties enables the abuses seen in modern chapter 11. I thus use this Article to frame bankruptcy-specific corporate fiduciary duties and then identify several common instances in which the debtor-corporation's board must act to meet those duties. This Article is the first to analyze the debtor's fiduciary duties from a perspective that integrates the literature on chapter 11 corporate governance and broader corporate bankruptcy policy considerations. While the articles identifying problems with modern chapter 11 are legion, those offering solutions are rare.

TABLE OF CONTENTS I. INTRODUCTION 252 II. BACKGROUND 254 A. The General Framework of Corporate Bankruptcy Law 254 1. The Mechanics of Chapter 11 Reorganization 254 2. 11 U.S.C. [section] [...]

One Sunday night in August 2021, bankruptcy law, plans of reorganization, and third-party releases and injunctions became notoriously part of popular culture when John Oliver, the host of Last Week [...]

Table of Contents Introduction I. Escaping Liability for Sexual Misconduct: Bankruptcy as a Loophole A. The Fundamentals of Chapter 11 Bankruptcy i. General Overview ii. Mass Torts in Bankruptcy B. [...], The MeToo Movement has spurred a wave of sexual misconduct-related lawsuits against corporations, prompting many to file for bankruptcy. Recent examples include the Weinstein Company, Boy Scouts of America, and USA Gymnastics. This Article is the first to analyze the long-term social effects of bankruptcy law and the ways in which it potentially perpetuates sexual misconduct by denying victims their day in court, limiting their recovery, and distorting monitoring incentives. Specifically, because current bankruptcy law protects secured creditors and often shields managers as well, these groups have little incentive to monitor sexual misconduct, as they are effectively insulated from damage claims through the absolute priority rule and the use of third-party releases. To prevent that result, this Article offers several policy proposals to ensure that managers, lenders, and other financially healthy parties remain accountable and invest resources to fight sexual misconduct. Managers could, for example, monitor sexual misconduct directly, and lenders could modify their pricing and underwriting practices to encourage compliance. While these policy proposals are designed to address sexual misconduct, they have broad applicability to other ESG risks, such as human rights and environmental violations. This Article provides a novel discussion of the impact of bankruptcy law on corporate misbehavior and resource allocation in an era of corporate responsibility.

ABSTRACT: Corporate law in the United States of America has been shaped and developed on the basic assumption that stakeholders in a firm want the firm to succeed. However, due [...]

TABLE OF CONTENTS Introduction I. The Importance of Title IV to IHEs II. Treatment of Debtor-IHEs and Title IV Funds by the Bankruptcy Code and the HEA III. The Erosion [...], Almost any financially distressed entity can attempt to restructure under chapter 11 of the Bankruptcy Code (1) while continuing to operate. Institutions of higher education ("IHEs") present one of the few exceptions. The moment a bankruptcy is filed, IHEs forfeit federal financial aid funding, their primary source of liquidity. Continued operations are impossible and going-concern value dissipates. Recent articles explain why the purported policy supporting the current treatment of IHEs is stale and misplaced, while the question of how they should be treated remains unexplored. This article fills the void and suggests administering IHE restructurings through the enactment of an IHE-specific subchapter to chapter 11 of the Bankruptcy Code. Restructuring IHEs requires navigation of cross-cutting priorities including: (i) protecting the public interest in federal financial aid funds, (ii) minimizing' reputational stigma to ensure continued viability, (iii) facilitating an efficient restructuring, and (iv) treating students' interests fairly. To accomplish this challenging task, the proposed subchapter draws from both scholarly and historical sources including Professor Laura Coordes's recent articles examining the challenges of restructuring of heavily regulated healthcare business entities and lessons from Congress's evolving treatment of railroad reorganizations. More specifically, the proposed subchapter: (i) grants the Department of Education veto power over a bankruptcy filing, (ii) implements an accelerated case timeline, (iii) incorporates a form restructuring support agreement, (iv) elevates students' claims and safeguards their records, and (v) facilitates the resolution of conflicts between the Bankruptcy Code and substantive non-bankruptcy law. Confronted by an inability to operate in chapter 11, financially distressed IHEs resort to bankruptcy liquidations, receiverships, and workouts as restructuring alternatives. To evidence the necessity of a subchapter, this article provides the first comprehensive evaluation of these options and animates each discussion with an IHE example. These case studies confirm that the alternatives are poor substitutes and provide further support for the provisions of the proposed subchapter. Admittedly, changing the Bankruptcy Code is a heavy lift, however, it is consistent with Congress's disparate treatment of IHEs. The current bankruptcy restructuring preclusion is a product of the 1990s, when ever-growing demand made the isolated incidents of financial distress appear to arise solely from fraud or wrongdoing. Change is now warranted in the face of increasing financial pressures resulting from demographic shifts and preference switches. After showing that the existing alternatives for IHEs fall short, this article marshals the evidence for enacting an IHE subchapter and outlines its composition.

INTRODUCTION: VeggieTales and Ben & Jerry's I. Shareholder Value Versus Stakeholder Interests A. The Corporation as Servant to Human Values B. Enhanced Scrutiny and Job Security C. Preexisting Solutions 1. [...]

The corporate restructuring community is in the grip of an unbridled fear of holdouts--bondholders who, in the face of an issuer's attempted restructuring, withhold their consent and retain their right [...]

The doctrine of equitable subordination is extraordinary, enabling judges to change the relative repayment priorities of bargained-for creditor claims. The doctrine originated in 1939 to subordinate the intercompany claims of [...]

INTRODUCTION Although the Bankruptcy Code does not expressly require a chapter 11 petition to be filed in good faith, there is a judicial consensus that Chapter 11 cases are subject [...]

Hotels, resorts, marinas, retail mixed-use, and other hospitality-related assets will likely continue to present challenges to lenders seeking expedited relief from bankruptcy stay provisions available to creditors in "single asset [...]