WE’RE BACK! THE CURRENT ISSUE OF THE AMERICAN BANKRUPTCY LAW JOURNAL IS READY FOR YOU!

Greetings everyone! The Summer 2024 issue of the American Bankruptcy Law Journal is online and waiting for you. We have four excellent articles on widely ranging topics. Here is a taste of each one.

Great reading awaits you. Enjoy.

Terry


Terrence L. Michael
Editor in Chief
American Bankruptcy Law Journal

IN THIS ISSUE

For decades the principle “you cannot contract around bankruptcy” has been a widely accepted reality, even when scholars have argued against the same. However, with the budding body of law foreclosing relief from bankruptcy courts to marijuana and marijuana adjacent companies, a potential growth opportunity for bankruptcy contracting may appear through the haze. In his article Up in Smoke: Bankruptcy by Contract in the Legal Cannabis Industry, Professor William A. Organek (Zicklin School of Business, Baruch College, City University of New York) rolls up his analysis of almost 75,000 pages of publicly-filed documents from marijuana related companies to examine whether such companies include contract terms to replace or stand-in for unavailable bankruptcy relief. Professor Organek’s analysis shows that even though budding companies may run out of green and into financial trouble, the examined contracts indicate that few are having blunt discussions with creditors and largely letting the opportunity to contract around bankruptcy go up in smoke. The article suggests that high transaction costs may explain why bankruptcy contracting is rare and offers pot-ential suggestions for improving outcomes when the buzz wears off for cannabis companies.

To read the article, click here.

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Who gets to control how a debtor uses its assets in a chapter 11 case? One intuitive answer is the debtor, subject to providing adequate protection or obtaining the consent of any affected creditors. After all, it’s the debtor’s estate chapter 11 is supposed to maximize. But the analysis is more complicated. In this article, Professor Jared Mayer (University of Chicago) identifies two specific kinds of creditor control rights—investment-backed control rights and spillover control rights—that are, and should be, treated differently under the Bankruptcy Code. Investment-backed control rights focus on protecting a creditor’s investment in the debtor, whereas spillover control rights safeguard the creditor’s enterprise value from how a debtor may affect it through a shared resource. The article explains the nature and optimal treatment of each kind of control right in bankruptcy and argues that chapter 11 should preserve the complementarities that investment-backed and spillover control rights generate.

To read the article, click here.

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In the world of bankruptcy, it is ALWAYS election season. No, not that kind of election; the election creditors can make under § 1111(b) of the Bankruptcy Code. In this article, Professor Steven Schwarcz and Christina Treczynski (Duke University) tell us of the potential unfairness of an § 1111(b) election to the debtor and other creditors when a non-recourse financier makes the election. Our authors offer proposals to make § 1111(b) operate fairly for all involved.

To read the article, click here.

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The focus on forum shopping has been on complex chapter 11 cases being filed in a limited number of U.S. districts. Dolan Bortner has provided a thoughtful analysis as to how chapter 15 filings impact a debtor’s ability to obtain relief otherwise not afforded U.S. debtors.

Mr. Bortner observes that through chapter 15, business entities domiciled in the United States can enforce rights, such as non-consensual third-party releases, that are currently unavailable in the United States. Mr. Bortner argues that to eliminate this disparity that chapter 15 be amended so that the laws of the debtor’s home country should be presumptive, whether the other country’s laws are more generous than U.S. law.

To read the article, click here.

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Professor Steven L. Schwarcz
Honored for ABLJ Article

The 2024 recipient of the Grant Gilmore Award, which is given in recognition of superior writing in the field of commercial finance law, is awarded to Steven L. Schwarcz for his extraordinary article Bankruptcy-Remote Structuring: Reallocating Risk Through Law, published in the American Bankruptcy Law Journal, Volume 97, Issue 1 (2023)