Forum

Bankruptcy by Another Name

A recent essay in this Journal critiques bankruptcy for limiting the litigation system’s ability to promote noneconomic public-policy goals. This Response argues that bankruptcy can and does further these public values, and that it is reasonably easy to tweak bankruptcy law to accommodate these goal…

Forum

Against Bankruptcy: Public Litigation Values Versus the Endless Quest for Global Peace in Mass Litigation

For the first time in years, in the Purdue Pharma opioids litigation, the Court is reviewing an unorthodox bankruptcy maneuver aimed at securing global settlement. This Essay critiques corporate defendants’ increasingly common turn to bankruptcy to shut down, or avoid altogether, complex civil litig…

Review

Unwritten Law and the Odd Ones Out

In a new book, Douglas Baird argues that the values of reorganization professionals, more than statute or case law, define the norms of corporate bankruptcy. This Book Review shows how rule-by-reorganizers can explain Chapter 11's troubling tendency to disregard the interests of legacy creditors. 

Article

Bankruptcy Grifters

Bankruptcy grifters infiltrate the Chapter 11 process, seeking bankruptcy’s benefits for mass-tort defendants without incurring many of its costs. This Article concludes that bankruptcy should not be a procedural panacea for companies facing litigation exposure, and offers a number of potential solu…

Forum

Mandatory Aggregation of Mass Tort Litigation in Bankruptcy

Nondebtor releases are the rotten core of the “bankruptcy grifter” phenomenon that Lindsey Simon’s article critiques. Such releases are an unconstitutional exercise of substantive common lawmaking by the federal courts, and they are not necessary for the bankruptcy process to facilitate efficient an…

Note

One Size Fits None: An Overdue Reform for Chapter 7 Trustees

Despite their differences, consumer and business Chapter 7 cases are administered by the same trustees under the same rules. We advance normative arguments against this one-size-fits-all approach, buttressed by novel empirical research. Two policy changes are appropriate: (1) trustee compensation sh…

Forum

Pandemic Hope for Chapter 11 Financing

The pandemic revealed that the increasing complexity of debtors’ capital structure could supply much-needed competition in the Chapter 11 financing market, as other inside lenders increasingly challenge a debtor’s favored inside lenders. After discussing the benefits of this surprising development, …

Forum

COVID-19 Debt and Bankruptcy Infrastructure

The COVID induced debt spike on corporate balance sheets portends a wave of future bankruptcy cases. Congress should act now to build up a bankruptcy infrastructure by requiring that every circuit create a “business bankruptcy panel” designed to administer the Chapter 11 filing of large companies. R…

Forum

Small Business Disaster Relief and Restructuring

To assist small businesses in the wake of an exogenous shock, Congress should consider implementing a system of lending that models the financing provided to small business debtors in a bankruptcy proceeding. Such a system would be more targeted, effective, and fair than traditional government loans…

Forum

Shocking Business Bankruptcy Law

The intersection of major crises and financial distress generates no shortage of stock stories. This Essay offers one more: how shocks can be used opportunistically in big Chapter 11 cases to unravel bankruptcy law, and to shift the system further away from the objective of responding to overindebte…

Forum

J. Crew, Nine West, and the Complexities of Financial Distress

The law-and-economics literature assumes that omnisciently rational “sophisticated parties” write optimal contracts, making bankruptcy law unnecessary. Two case studies, J. Crew and Nine West, illustrate the limitations of this idealized model. We argue for a theory of debt contracting based in boun…

Note

Reconstructing the Bankruptcy Power: An Originalist Approach

The Bankruptcy Clause delimits Congress’s bankruptcy power, but its limits changed after ratification of the Thirteenth Amendment. Before, it enabled collective creditor remedies against merchant debtors; after, it provided relief to insolvent debtors threatened by economic oppression. Recognizing t…

Article

Distorted Choice in Corporate Bankruptcy

Two new strategies—restructuring support agreements and deathtrap provisions—distort the voting process in nearly every big Chapter 11 case.  Although they could be banned, this Article, the first comprehensive assessment, calls for a more nuanced approach, outlining four rules of thumb for determin…

Forum

The Proceduralist Inversion – A Response to Skeel

This essay assesses Distorted Choice in Corporate Bankruptcy, by David Skeel. While Skeel usefully identifies how Restructuring Support Agreements (RSAs) help debtors secure support for Chapter 11 reorganizations, this essay argues that Skeel fails to appreciate that RSAs can also short-circuit the …

Article

Governance Reform and the Judicial Role in Municipal Bankruptcy

Recent proceedings involving large municipalities such as Detroit, Stockton, and Vallejo illustrate both the utility and limitations of using the Bankruptcy Code to adjust municipal debt. In this Article, we contend that, to resolve fully the distress of a substantial city, mun…

Note

Debtor’s Dilemma: The Economic Case for Ride-Through in the Bankruptcy Code

122 Yale L.J. 1594 (2013).

Following the 2005 amendments to the Bankruptcy Code, a Chapter 7 debtor hoping to retain an encumbered asset such as a motor vehicle after bankruptcy faces at least five options. The Bankruptcy Code allows a debtor to redeem the asset, reaffirm the debt, or convert to a Ch…

Note

Bankruptcy-Proof Finance and the Supply of Liquidity

122 Yale L.J. 460 (2012).

The 2008 financial crisis has prompted widespread criticism of the bankruptcy safe harbors for repurchase agreements (repos) and derivatives, which allow a failed firm’s counterparties to enforce these contracts outside of the bankruptcy process. The emerging consensus holds…

Feature

Bankruptcy, Backwards: The Problem of Quasi-Sovereign Debt

121 Yale L.J. 888 (2012).

This Feature considers the debts of quasi-sovereign states in light of proposals to let them file for bankruptcy protection. States that have ceded some but not all sovereign prerogatives to a central government face distinct challenges as debtors. It is unhelpful to analy…

Note

The Economic Logic of the Lease/Loan Distinction in Bankruptcy

120 Yale L.J. 1492 (2011). 

The Bankruptcy Code accords much more favorable treatment to lessors than to secured lenders, but legal scholars have yet to identify a normative justification for the disparate treatment of the two transaction types. Law-and-economics scholars have written off the lease…

Note

Bankruptcy as Constitutional Property: Using Statutory Entitlement Theory To Abrogate State Sovereign Immunity

119 Yale L.J. 1568 (2010). 

In the decade following Seminole Tribe’s ruling that Article I is not a grant of authority to abrogate state sovereign immunity, scholars and courts overwhelmingly agreed that the Eleventh Amendment barred Congress from subjecting states to suit in bankruptcy proceedings…

Article

Antibankruptcy

119 Yale L.J. 648 (2010). 

In large Chapter 11 cases, the prototypical creditor is no longer a small player holding a claim much like everyone else’s, but rather a distressed debt professional advancing her own agenda. Secured creditors are more pervasive and enjoy much more control than they had e…

Comment

Applying the Absolute Priority Rule to Nonprofit Enterprises in Bankruptcy

118 Yale L.J. 1231 (2009).

Article

The Case for Symmetry in Creditors' Rights

118 Yale L.J. 806 (2009).

Using an original framework for evaluating bankruptcy rules, this Article casts doubt on the efficiency of legal arrangements that give some creditors an absolute advantage over others in the division of a debtor’s assets. Such arrangements, which I classify as asymmetr…

Essay

Absolute Priority, Valuation Uncertainty, and the Reorganization Bargain

115 Yale L.J. 1930 (2006)

In a Chapter 11 reorganization, senior creditors can insist on being paid in full before anyone junior to them receives anything. In practice, however, departures from "absolute priority" treatment are commonplace. Explaining these deviations has been a central preoccupation…

Note

Bailing Out Congress: An Assessment and Defense of the Air Transportation Safety and System Stabilization Act of 2001

115 Yale L.J. 438 (2005)

This Note provides the first detailed account of the conception, impact, and success of the Air Transportation Safety and System Stabilization Act (ATSSSA) of 2001, an $18 billion federal bailout of the airline industry passed eleven days after the terrorist attacks of Septem…

Comment

The Unfinished Business of Bankruptcy Reform: A Proposal To Improve the Treatment of Support Creditors

115 Yale L.J. 247 (2005)

Amid the controversy surrounding the recently enacted Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (2005 Act), few commentators have focused on the Act's provisions designed to enhance the protection of "support creditors"--a class of creditors consisting …

Note

More Equal than Others: Defending Property-Contract Parity in Bankruptcy

114 Yale L.J. 1099 (2005)

Contracts create property; contractual rights and obligations are property. In bankruptcy, however, this aspect of nonbankruptcy law is often not recognized. This Note argues that bankruptcy law and policy should recognize the property in contract. This Note examines instanc…

Article

A Dilution Mechanism for Valuing Corporations in Bankruptcy

111 Yale L.J. 83 (2001)

This Article proposes a new mechanism for valuing firms in bankruptcy. Under the "senior dilution" mechanism, a court would dilute the reorganized stock issued to senior claimants by issuing additional shares to junior claimants until there was no excess demand for the stock a…

Article

Currency Policies and Legal Development in Colonial New England

110 Yale L.J. 1303 (2001)

This Article presents a new interpretation of the relation of law to economic development in colonial New England. Prior legal historical scholarship has focused almost exclusively on judicial decisionmaking, emphasizing judges' role in adapting the law in some optimal way …