Exceptions to Bankruptcy Preferences: Countryman Updated
Michael A. Bloom, Richard D. Gorelick, and Heather A. MacKenzie, 47(2): 529–70 (Feb. 1992)
The definitive exposition on voidable preference is Professor Vern Countryman's Article, The Concept of a Voidable Preference in Bankruptcy , 38 VAND. L. REV. 713 (1985). This Article represents a composite effort to analyze the developing trends since publication of the Countryman article. The six major exceptions to the bankruptcy trustee's avoidance power under section 547(c) of the Bankruptcy Code are reviewed in the context of developing case law.
Structured Finance Goes Chapter 11: Asset Securitization by Reorganizing Companies
Stephen I. Glover, 47(2): 611–46 (Feb. 1992)
Over the past few years, an increasing number of businesses that generate loans and receivables have satisfied their cash needs by engaging in structured finance transactions. These transactions are designed to protect lenders from the risk that the business will become the subject of bankruptcy proceedings. This Article examines the feasibility of structured financings by companies that are already in Chapter 11 proceedings and concludes that such transactions should be workable.
Employment of Attorneys by Debtors in Possession: A Proposal for Modification of the Existing Attorney Eligibility Provisions of the Bankruptcy Code and the Existing Conflict of Interest Provisions of the Ethical Rules of Professional Responsibility
Richard L. Epling and Claudia G. Sayre, 47(2): 671–710 (Feb. 1992)
Under the Bankruptcy Code, professionals who are proposed for employment by both trustees and debtors in possession must satisfy virtually the same eligibility test. This Article argues that the Bankruptcy Code should employ different eligibility standards for the employment of professionals by debtors in possession as opposed to trustees and proposes a new eligibility standard for this purpose. Because local ethical codes also affect an attorney's eligibility for representation of a debtor in possession, the Article discusses the necessity of amending the ethical codes to ensure that they permit the implementation of an attorney eligibility standard of national scope in the context of Chapter 11 reorganizations.
Two Models of Corporate Governance
Michael P. Dooley, 47(2): 461–527 (Feb. 1992)
This Article describes the basic elements that must be included in any model for the governance of publicly held corporations. It argues that the ALI's proposed Corporate Governance Project differs so fundamentally from the model represented by existing law as to constitute a wholly new model of corporate governance. It then describes the differences in outcomes that can be expected from applying each of these competing models to four pivotal areas of corporation law. The Article concludes that the ALI model imposes excessive costs on corporate decisionmaking and predicts that the Governance Project will not make a lasting impression on U.S. corporation law.
The Power and Propriety of Bankruptcy Court Intervention in Actions Between Nondebtors
Howard C. Buschman III and Sean P. Madden, 47(3): 913–60 (May 1992)
This Article proposes a paradigm for evaluating the scope of the bankruptcy court's authority to entertain disputes between nondebtors that only affect the bankruptcy case indirectly. The authors suggest a framework for analyzing whether and to what extent the court should insinuate itself into disputes between nondebtors.
The Right of Oversecured Creditors to Default Rates of Interest from a Debtor in Bankruptcy
Craig H. Averch, Michael J. Collins, and Stephen A. Youngman, 47(3): 961–90 (May 1992)
This Article considers the enforceability of contractual default interest rates for oversecured creditors in a bankruptcy proceeding. The authors conclude that the statutory structure of the Bankruptcy Code allows an oversecured creditor to receive interest at its contract rate, including the contractual default rate. Courts have split on the issue, with some courts applying equitable principles to deny oversecured creditors default rate interest. The authors reject these courts' application of equitable principles on the basis that the "holistic" interpretation of the Bankruptcy Code allows an oversecured creditor to charge and collect interest at the contractual rate.
The Purchase and Sale of Assets in Reorganization Cases—Of Interest and Principal, of Principles and Interests
Lee R. Bogdanoff, 47(4): 1367–1460 (Aug. 1992)
This Article introduces the topic of the purchase and sale of assets in Chapter 11 reorganization cases from both a doctrinal and practical perspective. It provides an overview of the provision of the Bankruptcy Code governing the disposition of assets in Chapter 11, explores many of the unresolved issues arising in the context of asset sales, and discusses in detail the two methods for divesting of assets in reorganization cases by notice and a hearing during the case or pursuant to a plan of reorganization.
When Airlines Crash: Section 1110 Revisited
Sandor E. Schick, 48(1): 277–314 (Nov. 1992)
Section 1110 of the Bankruptcy Code provides special protection to a specific class of aircraft financiers, including "lessors," in the event of an airline bankruptcy. Recent decisions in several airline Chapter 11 cases supported the view that section 1110 is limited to "true" leases. Although legislation proposed in Congress last term would, if enacted, prospectively protect all lease and secured debt financing, it is the thesis of this Article that "lessors" have good arguments that section 1110, as currently in effect, applies to all leases of aircraft equipment, whether or not such leases are "true" under applicable state law.
Fiduciary Obligations of Directors of the Financially Troubled Company
Gregory V. Varallo and Jesse A. Finkelstein, 48(1): 239–55 (Nov. 1992)
Recent decisions of the Delaware Court of Chancery have examined the nature of the fiduciary duties owed to creditors of the insolvent (and nearly insolvent) Delaware corporation. These decisions may have opened the "flood gates" to a new variety of litigation. This Article traces the evolution of the so-called trust fund doctrine and concludes that the doctrine should be critically reevaluated in light of modern bankruptcy and insolvency statutes.