The Bankruptcy Roundtable
Promoting the dissemination of academic and practitioner views of current bankruptcy issues
Latest News from the Bankruptcy Roundtable
Venezuela’s Debt Restructuring: An Alternative Path
By Richard J. Cooper, Ignacio Lagos, and Sean O’Connell (Cleary Gottlieb Steen & Hamilton LLP)* Richard J. Cooper, Ignacio Lagos, and Sean O’Connell In the aftermath of its recent devastating earthquakes, Venezuela might well take a moment to reconsider its rapid approach to a sovereign debt restructuring announced in May of this year. The decision to pause a debt restructuring process is not necessarily a straightforward one. On the one hand, Venezuela’s desire to move ahead quickly is understandable. Venezuela’s debt is unsustainable and a clear impediment to the new investment it requires. The government wants to show prospective investors that there is a path to a restructuring and they need not wait to make critical investments…
New York District Court Affirms Narrow Scope of “Public Policy Exception” in Chapter 15 Cases
By Corinne Ball, Dan T. Moss, David S. Torborg, and Isel M. Perez (Jones Day) Corinne Ball, Dan T. Moss, David S. Torborg, and Isel M. Perez (Jones Day) Chapter 15 of the Bankruptcy Code reached its 20th year of enactment in October 2025. A legislative framework premised on international comity, it has proven to be an invaluable tool for coordinating cross-border bankruptcy and insolvency cases and providing assistance to foreign bankruptcy courts and their functionaries. One safeguard built into chapter 15 to ensure that recognition of foreign bankruptcy proceedings and related relief does not violate chapter 15’s purpose and underlying principles is the “public policy exception” set forth in section 1506 of the Bankruptcy Code. That…
When She Fails: Women Entrepreneurs and Gender Gaps in Business Bankruptcy
By Hosein Maleki (Rutgers Business School), Mahsa Kaviani (University of Delaware), Simi Kedia (Rutgers Business School), and Shaghayegh Pourvosoughi (Rutgers Business School) Hosein Maleki (Rutgers Business School), Mahsa Kaviani (University of Delaware), Simi Kedia (Rutgers Business School), and Shaghayegh Pourvosoughi (Rutgers Business School) When She Fails: Women Entrepreneurs and Gender Gaps in Business Bankruptcy studies whether the bankruptcy system delivers different outcomes to female- and male-owned firms and, if so, why. Using a large sample of U.S. small-business bankruptcy filings, we show that female-owned firms are more likely to be pushed into liquidation and less likely to emerge successfully from bankruptcy than observably similar male-owned firms. In our data, female-owned firms are 24 percent more likely to file…
Creditor-On-Creditor Violence
By Samuel Antill (Harvard Business School), Neng Wang (Columbia Business School & Cheung Kong Graduate School of Business) & Zhaoli Jiang (Hong Kong Polytechnic University) In a liability management exercise (LME), a firm raises liquidity by issuing new secured debt with a highest-priority lien on collateral that was previously pledged to existing secured lenders. Typically, a firm achieves this by convincing a majority of existing secured lenders to amend their credit agreement, allowing for new debt to obtain a higher-priority lien on the existing debt’s collateral. In return, this majority coalition gets to provide the new highest-priority loan and swap their old debt for new highest-priority debt. Thus, the firm raises liquidity, the participating majority coalition retains…
Understanding the Statutory Cap on Landlord Claims for Rejected Leases in Bankruptcy
By Brandon E. Barker, Geoffrey H. Smith, Megan Preusker & Dormie Ko (Mintz) Brandon E. Barker, Geoffrey H. Smith, Megan Preusker & Dormie Ko (Mintz) This article examines how the US Bankruptcy Code limits landlord claims when a debtor-tenant rejects a commercial lease, an issue growing in importance as corporate bankruptcy filings continue to rise. With companies increasingly using Chapter 11 to shed unprofitable real estate, landlords often face disputes over the scope of recoverable damages following lease rejection. A key controversy discussed in the article is whether the 15% limitation should be calculated based on the total remaining rent owed over the lease term (the “Rent Approach”) or based on the rent owed during the first…
Chapter 11 Plan that Abridged Non-Debtor Lessee’s Rights to Remain in Possession After Rejection Unconfirmable as Having Been Proposed in Bad Faith
By Trisha L. Mowbray & Ryan Sims (Jones Day) Trisha L. Mowbray & Ryan Sims (Jones Day) The Bankruptcy Code includes special protections for real property lessees whose lease agreements are rejected in bankruptcy by a trustee or chapter 11 debtor-in-possession by giving a lessee under a rejected real property lease the option to remain in possession of the leased premises during the remaining term of the lease. The Bankruptcy Code also provides that a chapter 11 plan must be proposed in good faith as a condition to confirmation of the plan. The interaction between these two concepts took center stage in a ruling handed down by the U.S. Bankruptcy Court for the District of Colorado. In In…
Former Celsius Customers’ Motion to Withdraw Bankruptcy Court Reference Rejected by SDNY
By Luke Barefoot & Brendan Gerdts (Cleary Gottlieb) Luke Barefoot & Brendan Gerdts Amid the 2022-23 “crypto winter”, Celsius Network filed for bankruptcy in 2022 and emerged in 2024. The Litigation Administrator appointed under Celsius’ reorganization plan has since pursued various claims and causes of action including preference claims against former Celsius Network customers who withdrew digital assets shortly before Celsius’ July 2022 bankruptcy filing. A group of 174 former Celsius customers (“the Defendants”) sought to withdraw the reference of bankruptcy avoidance proceedings from the Bankruptcy Court such that those claims would be heard by the United States District Court for the Southern District of New York (the “District Court”), one of the few venue-shifting options available…
New Jersey bankruptcy court upholds debtor-chosen venue under Asset Based Approach
By Megan Wasson & Rebecca Polinsky (HSF Kramer LLP) Megan Wasson & Rebecca Polinsky The bankruptcy venue statute, 28 U.S.C. Section 1408, allows a debtor to file in any district where its domicile, residence, principal place of business, or principal assets were located (i) during the 180 days preceding the bankruptcy filing or (ii) for a longer portion of that period than in any other district. Judge Michael B. Kaplan recently issued a letter opinion analyzing the “deliberately broad” statute. Multi-Color Corp. and its affiliates (“Multi-Color” or the “Debtors”) filed prepackaged Chapter 11 cases in the Bankruptcy Court for the District of New Jersey (the “Court”) on January 29, 2026 (the “Petition Date”). One dormant entity, Debtor…
Bankruptcy as Presidential Resistance
By Alvin Velazquez (Indiana University Maurer School of Law) Alvin Velazquez Editor’s Note: Professor Velazquez’s article was recently published with the Fordham Urban Law Journal. Litigation against President Trump for withholding federal funds from cities in his “war on woke” and sanctuary cities has taken place either in Article III courts under the Administrative Procedure Act or in the Court of Federal Claims under the Tucker Act. However, there is a third place to resolve these disputes and allocate who bears the consequences of Presidential action that no one has yet discussed: bankruptcy courts. Federal grants make up about one-third of the average city’s budget, and the President could render a city insolvent by swiftly cutting off…
Bankruptcy Redemption Options
By Richard Hynes (University of Virginia School of Law) Richard Hynes The ancient right of redemption allows a party to repurchase assets lost through default at an earlier time. Recently, multiple prominent scholars and the American Bankruptcy Institute have independently proposed granting multi-year or even “perpetual” bankruptcy redemption options to holders of a firm’s junior claims or interests, such as shareholders or unsecured creditors. These options would allow juniors to repurchase or redeem the firm’s equity or assets from whomever received them in bankruptcy. If adopted, these reforms would fundamentally change corporate reorganizations as the current absolute priority rule requires that juniors lose all rights if more senior claims are not paid in full. The reforms would…
Chapter 15 Offers Protection for Cannabis Companies
By David Cohen, Garrett Fail, Robert Niles-Weed, Alex Cohen, Max Bloom, Andrew Clarke (Weil, Gotshal & Manges LLP)* David Cohen, Garrett Fail, and Robert Niles-Weed (add. authors not pictured) The absence of a reliable path to financial restructuring under the Bankruptcy Code has long been a challenge for companies involved in the state-legal cannabis industry in the United States. This concern is particularly acute as of late: Although the legal cannabis industry has expanded rapidly in recent years, many operators have faced steep losses, heavy debt loads, challenging tax treatment, difficulty accessing the capital markets, and competitive challenges from an oversaturated market. Industry experience and empirical research have shown that without clear access to traditional restructuring tools,…
The Erie Doctrine, Code Common Law, and Choice-of-Law Rules in Bankruptcy
By Ralph Brubaker (University of Illinois College of Law) Ralph Brubaker State law pervades bankruptcy litigation, as all parties’ relative rights in bankruptcy are governed by nonbankruptcy law, except to the extent modified by federal bankruptcy law itself. Indeed, that result is constitutionally compelled with respect to parties’ substantive state-law rights and obligations, under the holding of Erie R.R. v. Tompkins. How should a federal bankruptcy court choose the applicable state law, though, when the law of two or more states could apply to a particular matter before the court? In diversity cases, the Supreme Court’s enduring decision in Klaxon Co. v. Stentor Electric, compels a federal court to choose applicable state law by employing the choice-of-law…
Bankruptcy’s Trilemma: A Unifying Framework
By Kenneth Ayotte (University of California Berkeley), Jason Donaldson (University of Southern California), and Giorgia Piacentino (University of Southern California) Kenneth Ayotte, Jason Donaldson, and Giorgia Piacentino What is the purpose of corporate bankruptcy law? What problems is the law set up to solve? In our paper, we propose an economic framework that is simple but more comprehensive than existing frameworks. We argue that there are three major problems that bankruptcy law addresses: commons, anticommons, and agency. The commons problem is sometimes called the ‘creditor run,’ or the ‘grab race’: creditors acting individually to seize a debtor’s assets can destroy value for the creditors collectively. The anticommons problem is the problem of holdout: creditors exercising rights to…
Lessons from the Convergence of Corporate Restructurings
By Robert Miller (University of South Dakota Law School) Robert Miller The two principal mechanisms for large corporate restructurings—liability management exercises (“LMEs”) and chapter 11 bankruptcies—have converged around a shared structure. Both feature transactions that are broadly participatory yet distributionally unequal, in which equity sponsors frequently benefit despite their formally subordinate position. The similarity is striking because, unlike the Bankruptcy Code, contractarian LMEs operate without a governing statutory framework. This Article uses the evolution of LMEs as a comparative lens to reassess two of the most consequential and contested features of chapter 11 practice: restructuring support agreements (“RSAs”) and debtor-in-possession (“DIP”) financing.The early winner-take-all phase of LMEs generated immense deadweight litigation costs. In response, lenders developed cooperation…
The Value And Legality Of Lender Cooperation Agreements
By Brett Seaton (The Wharton School, University of Pennsylvania) Brett Seaton Editor’s Note: At the time of writing this article, Brett Seaton was an undergraduate student at Wharton. We are pleased to share his undergraduate thesis on the BRT, and hope to periodically share more exceptional student work in the future. Liability management exercises (LME) have emerged as the latest trend in the restructuring industry due to a confluence of factors in the corporate credit market, judicial system and macroeconomy. Creditors have pursued an array of solutions to avoid LME—namely adding blocking covenants in credit agreements for newly issued debt. For debt that has already been issued, lenders have only one option to regain negotiating leverage and…
Liability Management 2026: For Better or Worse
By Joshua A. Feltman, Emil A. Kleinhaus, Michael S. Benn, Benjamin S. Arfa, Michael H. Cassel, Stephanie A. Marshak, and Matthew C. Rowe (Wachtell, Lipton, Rosen & Katz) Joshua A. Feltman, Emil A. Kleinhaus, and Michael S. Benn (add. authors not pictured) Much ink was spilled in 2025 (and before) arguing that liability management exercises are doomed to fail, with the Financial Times reporting that around 80% of companies default on their restructured debt within three years of an LME. But the success stories are real. Just ask stockholders of Lumen, Carvana, EchoStar, CommScope, U.S. Renal, Boardriders, The RealReal, WideOpenWest, and others. At the same time, the costs involved in LMEs can be significant: direct transaction expenses…
Distressed Debt Legal Insights: Fossil Group’s UK Restructuring Plan
By Leonard Klingbaum, Matthew Czyzyk, Sam Badawi, Nitin Konchady, Faiza N. Rahman, Matthew M. Roose, Natalie Blanc, Natalie Raine, and Alisha Turak (Ropes & Grey) Leonard Klingbaum, Matthew Czyzyk, and Sam Badawi (add. authors not pictured) Ropes & Gray analyzes Fossil Group, Inc.’s recent restructuring transaction, focusing on how Fossil used a combination of U.S. securities law techniques and an English restructuring process to address upcoming debt maturities and overcome insufficient creditor participation in a traditional exchange offer. Fossil faced a looming maturity of approximately $150 million in unsecured notes due in November 2026. Ownership of the notes was concentrated, with roughly 60 percent held by two institutional investors and the remainder widely held by retail investors.…
The Global Law of Debt
By Jared A. Ellias (Harvard Law School) and Narine Lalafaryan (University of Cambridge, Faculty of Law; Cambridge Endowment for Research in Finance) Jared A. Ellias and Narine Lalafaryan It is not surprising that New Fortress Energy Inc. (“New Fortress”), an energy company traded on NASDAQ, incorporated in Delaware and headquartered in New York, whose major assets are in the United States and South America, recently announced that it will restructure some of its $5 billion in debt with the assistance of the New York–based law firm Skadden. What is unexpected is how it plans to do so: by buying a plane ticket to London and launching an insolvency proceeding under Part 26A of the UK Companies Act…
Houston, We Have (Another) Problem
By Jeffrey Pawlitz (Willkie Farr & Gallagher LLP) Jeffrey Pawlitz In September 2025, the U.S. District Court for the Southern District of Texas issued a significant ruling in ConvergeOne Holdings, Inc., reversing the bankruptcy court’s confirmation of a Chapter 11 reorganization plan. The court held that the plan violated the Bankruptcy Code’s “equal treatment” requirement by granting certain lenders—but not others in the same creditor class—exclusive rights to participate in a lucrative backstopping arrangement. Before filing for bankruptcy, ConvergeOne negotiated a restructuring agreement with secured lenders holding a majority of the debt (the “Majority Lenders”), who received the exclusive opportunity to purchase discounted equity and earn premium fees for backstopping a rights offering. The remaining “Minority Lenders”…
Judging Business Judgment: The Federal Common Law of Bankruptcy Transactions in Chapter 11
By Dolan Bortner (Stanford Law School) Dolan Bortner When a federal judge encounters a statutory gap too wide to fill through ordinary statutory interpretation, should she borrow state law or make her own rule? The Supreme Court instructs judges to err on the former side, weighing the preservation of otherwise-applicable state law against federal needs that might compel a common-law (i.e., judge-made) rule. But in bankruptcy, a field long motivated more by equity than the strict letter of the Bankruptcy Code, judges frequently strive to create the best rule for the case. Products of this common-lawmaking enterprise include standards as weighty as those for transactions under §§ 363-365 of the Code, which allow corporate debtors to breach…
Liability Management’s Limited Runway: Corporate Restructuring Today
By Mark Roe (Harvard Law School) and Vasile Rotaru (Harvard Law School; University of Oxford) Mark Roe and Vasile Rotaru Coercive, non-pro rata debt restructurings—now widely labeled “liability management exercises” (LMEs), just like their pro rata siblings—have become a central tool for distressed borrowers. Proponents of the non-pro rata restructuring often argue that it gives the company time to turn around and take off, reduce financial distress, and typically avoid bankruptcy. Our new paper argues that this expectation is overstated: on average, LMEs buy a shorter, more fragile runway than proponents suggest; most coercive LMEs in our sample ultimately default again or file for bankruptcy anyway. An LME, broadly, is simply an out-of-court debt renegotiation—yesterday’s “workouts.” In…
Lessons From the Silicon Valley Bank Chapter 11: Preserving Indemnification and Contribution Rights
By Shana A. Elberg, Bram A. Strochlic, and Moshe S. Jacob (Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates) Shana A. Elberg, Bram A. Strochlic, and Moshe S. Jacob Summary of the Silicon Valley Bank Bar Date Ruling Judge Glenn issued a significant decision in the Silicon Valley Bank (SVB) Chapter 11 case, clarifying that a bankruptcy bar date can extinguish indemnification and contribution rights against a debtor, even if the underlying lawsuit is filed after the bar date. This ruling underscores the importance for directors, officers, and other stakeholders to proactively assess and take steps to safeguard such potential claims in bankruptcy. Background and Context SVB’s 2021 merger with Boston Private Financial Holdings (Boston Private)…
Recharacterizing Contracts: The Sale-versus-Loan Problem of Receivables Financing
By Steven L. Schwarcz (Duke University School of Law) and Isabelle Stewart (Duke University School of Law) Steven L. Schwarcz and Isabelle Stewart This Article addresses a complex and critically important issue that lies at the intersection of contract, property, commercial, and bankruptcy law and is crucial to corporate wealth production: what constitutes the sale of intangible rights to payment, or “receivables.” Courts often recharacterize contracts that purport to sell such rights if, notwithstanding being designated a sale, some of the substantive terms of the transfer are indicative of a loan. As a highly simplified example, assume that Party A (the transferor/purported seller) contracts to sell $1,000 of receivables to Party B (the transferee/purported buyer) for $950.…
Mass-Tort Trusts and the Faustian Bargain
By Samir D. Parikh (Wake Forest University – School of Law) and Suneal Bedi (Indiana University – Kelley School of Business) Samir D. Parikh and Suneal Bedi In bankruptcy, establishing a mass‑tort trust is the final piece in structuring resolution of protracted aggregate litigation faced by a corporate debtor. As seen in cases like Purdue Pharma and Boy Scouts of America, the multibillion‑dollar aggregate settlement figure captures all the headlines. But the trust distribution provisions—which actually provide the details of how individual claimants will be treated and what they will receive—are an afterthought. This odd dynamic has allowed antiquated trust provisions that create short‑term benefits and often significant long‑term costs to proliferate. The Faustian Bargain is especially…
Florida Bankruptcy Court: Proposed DIP Financing and Sale Framework for Administratively Insolvent Debtors Did Not Violate Jevic’s Prohibition of Priority-Deviating Distributions
By Jeffrey Ellman (Jones Day) Jeffrey Ellman The U.S. Supreme Court ruled in Czyzewski v. Jevic Holding Corp., 580 U.S. 451 (2017), that the Bankruptcy Code prohibits final distributions to creditors that deviate from the Bankruptcy Code’s priority scheme as part of a “structured dismissal” of a chapter 11 case without the consent of affected creditors. Since then, courts have been called upon to determine whether the rationale of Jevic extends to other contexts, such as proposed settlements and bankruptcy asset sales. In In re Silver Airways, LLC, 671 B.R. 533 (Bankr. S.D. Fla. 2025), the U.S. Bankruptcy Court for the Southern District of Florida weighed in on this debate in an unusual context. The court approved…