April 13, 2011 Articles

A Bankruptcy Submission Hold

The sharp increase in the number of bankruptcy cases has been coupled with a similar mushrooming of bankruptcy-related litigation.

By Jay S. Geller and Jeremy R. Fischer

With the Great Recession of 2008, bankruptcy filings in the United States skyrocketed. There were 850,912 total bankruptcy petitions filed in 2007; that number ballooned to 1,593,081 in 2010. Am. Bankr. Inst., Annual Business and Non-Business Filings by Year (1980–2010), available at http://www.abiworld.org. The sharp increase in the number of bankruptcy cases has been coupled with a similar mushrooming of bankruptcy-related litigation. As fewer and fewer companies have reorganized and section 363 sales have become the norm, much of that litigation is now being pursued by trustees of liquidating trusts who often prefer to prosecute that litigation before juries that are seething with anger against Wall Street investment banks, other financial institutions, architects of Ponzi schemes, and “overpaid” executives.

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