Emory Bankruptcy Developments Journal

Volume 33Issue 1
A Tribute to Professor Grant W. Newton

Introduction: A Tribute to Professor Grant W. Newton

R. Jake Jumbeck | 33 Emory Bankr. Dev. J. 1 (2016)

Each year, the Emory Bankruptcy Developments Journal honors an individual who has made a significant impact on the field of bankruptcy law with the Distinguished Service Award for Lifetime Achievement. On April 7, 2016, the Emory Bankruptcy Developments Journal presented Grant Newton with the Eighteenth Annual Distinguished Service Award for Lifetime Achievement.

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Opening Remarks

Robert A. Schapiro | 33 Emory Bankr. Dev. J. 3 (2016)

Dean Robert Schapiro’s remarks honoring Grant Newton at the annual Emory Bankruptcy Developments Journal Banquet. Dean Schapiro highlighted Emory’s bankruptcy program, the Thirteenth Annual Emory Bankruptcy Developments Journal Symposium held in February, and Grant Newton’s leadership and achievements in bankruptcy law.

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Acceptance Remarks

Grant W. Newton | 33 Emory Bankr. Dev. J. 5 (2016)

Acceptance remarks of Grant Newton at the annual Emory Bankruptcy Developments Journal Banquet. Professor Newton shared several memorable highlights of his professional career, as well as his experience as an accounting professor.

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Articles

Non-Article III Adjudication: Bankruptcy and Nonbankruptcy, With and Without Litigant Consent

Ralph Brubaker | 33 Emory Bankr. Dev. J. 11 (2016)

This Article analyzes the Supreme Court’s 2015 decision in Wellness International Network, Ltd. v. Sharif. In upholding the constitutionality of non-Article III bankruptcy adjudications with litigant consent, Wellness resolved an important issue raised by the Court’s momentous 2011 Stern v. Marshall decision. The Wellness opinion, though, has more profound implications for the constitutionality of non-Article III adjudications, both bankruptcy and nonbankruptcy, whether those non-Article III adjudications are conducted with or without litigant consent. Beyond the bankruptcy context, Wellness reveals a general Supreme Court jurisprudence with a bifurcated analytical methodology that facilitates a complex interaction between the waivable personal and non-waivable structural interests protected by Article III, § 1. In the bankruptcy context, Wellness provides further evidence that the Court is, over a long run of decisions, simply confirming the constitutional significance of its extensive summary-plenary jurisprudence as the operative constitutional constraint on the adjudicatory powers of non-Article III bankruptcy judges.

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Fair Equivalents and Market Prices: Bankruptcy Cramdown Interest Rates

Bruce A. Markell | 33 Emory Bankr. Dev. J. 91 (2016)

Cramdown is the confirmation of a plan of reorganization over the dissent of an entire class of creditors. Bankruptcy’s absolute priority rule permits such confirmation only if the dissenting class is paid in full, or if no junior class receives anything. “Paid in full,” however, does not require payment in cash. It can consist of intangible promises to pay money that banks, investors, and markets regularly value. Whether this market value can precisely be transferred to cramdown has vexed many. Recently, the debate has flared when a bankruptcy court applied a chapter 13 case, Till v. SCS Credit Corp., to cramdown confirmation in Momentive, a large chapter 11 case. Given the legislative history and precedents in the cramdown area, this Article takes the position that Momentive was correct, and that courts should resist using pure market-based valuations in cramdown calculations.

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Bankruptcy’s Endowment Effect

Anthony J. Casey | 33 Emory Bankr. Dev. J. 141 (2016)

This Article responds to Professor Markell’s analysis of the recent controversy over cramdown interest rates in corporate bankruptcies. The Article argues that the controversy stems from courts and scholars assigning undue importance to preserving creditors’ nonbankruptcy endowments in a manner that is inconsistent with foundational bankruptcy policy. The Article makes the case that the guiding principle for optimal bankruptcy design should instead be the minimization of opportunistic behavior that reduces the net value of a firm. Applying this principle to the question of the cramdown interest rate, this piece shows that an optimal rule supports a cramdown interest rate based on the prevailing market rates for similar loans. The Article demonstrates that this approach is consistent with the Bankruptcy Code and the theoretical principles (although not the ultimate conclusion) that Professor Markell has advocated.

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Comments

“Complexity” As the Gatekeeper to Equitable Mootness

R. Jake Jumbeck | 33 Emory Bankr. Dev. J. 171 (2016)

Equitable mootness has troubled appellate courts since its creation in the 1980s. Despite the doctrine’s express limitation to “complex reorganizations,” courts have found appeals from relatively simple reorganizations and liquidation plans equitably moot. Courts have criticized and limited the doctrine in recent years, resulting in three Court of Appeals decisions within ten weeks of each other in 2015. This Comment argues that these criticisms ultimately stemmed from the doctrine’s misapplication. To apply the equitable mootness properly, this Comment proposes that appellate courts should first determine whether a complex reorganization occurred as a threshold matter. This Comment offers a four-factor normative approach to “complexity” that would determine whether a complex reorganization occurred. If a court determines a complex reorganization occurred after assessing these four factors, only then should it proceed to an equitable mootness analysis. This approach will keep equitable mootness the exception, not the rule.

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To Discharge or Not to Discharge: Tax Is the Question

Ryan G. Saharovich | 33 Emory Bankr. Dev. J. 219 (2016)

Prior to 2005, an individual was able to discharge debt related to a late-filed tax return as long as that individual satisfied the Beard test and certain statutory requirements. In 2005, Congress amended the Bankruptcy Code and included a definition of “return.” Under the new definition, a document is a return if the document “satisfies the requirements of applicable bankruptcy law (including applicable filing requirements).” Following the amendments, the Fifth Circuit created the “one-day-late” rule when it held that a tax form filed one day late is never a valid tax return. In contrast, the Ninth Circuit subsequently held that the Beard test is still applicable. This Comment argues that the one-day-late interpretation is incorrect, and that Congress intended to codify the Beard test through the 2005 amendments.

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Another Arrow in the Quiver: Preserving the Fresh Start in Debt Collection by Creating a National Registry for Discharge Orders

Joseph W. Sherman | 33 Emory Bankr. Dev. J. 269 (2016)

Although the Bankruptcy Code and the FDCPA have different purposes, the two frequently overlap where debt collectors are concerned. For example, consider a debt collector who sends a perfunctory initial collection letter referencing a debt that has been discharged in bankruptcy. Even though this letter technically violates the debtor’s fresh start and is unfair and deceptive, the remedies under both statutes require knowledge of the discharge, which the debt collector likely did not have, and which the FDCPA does not impute from the original creditor. This Comment suggests that the problem is a lack of information. This Comment proposes a solution that provides accurate information of discharged debts while also protecting the fresh start: amending the FDCPA to (1) create a national registry to house discharge orders; and (2) require that debt collectors search the registry prior to making a first collection attempt.

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Fighting an Uphill Battle: Reconciling Unpaid Contributions of Multiemployer Pension Plans with the Bankruptcy Code’s Defalcation Provision

Nicole Adalaide Griffin | 33 Emory Bankr. Dev. J. 313 (2016)

Five circuit courts have determined whether an employer’s unpaid contributions due under an employee benefit plan are plan assets under ERISA. When unpaid contributions are plan assets, the individual exercising authority or control over the assets is imputed fiduciary status under ERISA and, in turn, owes certain fiduciary duties and obligations to employee benefit funds. If the fiduciary fails to make the required contributions, then that individual becomes personally liable for the unpaid contributions. In bankruptcy, this result means that the unpaid contributions would be a nondischargeable debt if the court holds the individual liable for defalcation. This Comment reconciles the circuit split between the courts that decided this issue in bankruptcy and nonbankruptcy proceedings. It proposes a three-step approach that will allow courts determining this issue in bankruptcy proceedings to mirror their counterparts while still preserving the spirit of the Bankruptcy Code.

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Utilizing the Fourth Option: Examining the Permissibility of Structured Dismissals That Do Not Deviate from the Bankruptcy Code’s Priority Scheme

Kaylynn Webb | 33 Emory Bankr. Dev. J. 355 (2016)

Section 363 sales are increasingly used by debtors who wish to sell substantially all of their assets instead of attempting to restructure their estate through the chapter 11 reorganization process. Following a § 363 sale, debtors most commonly utilize one of the following three options to close their case: (1) request confirmation of a liquidation plan; (2) convert the chapter 11 case to a chapter 7 case; or (3) request a dismissal of the case. In In re Jevic, however, the Third Circuit closed the case by utilizing a fourth option: a structured dismissal, a type of relief not explicitly provided for in the Bankruptcy Code. Notably, the court confirmed the dismissal even though its provisions violated the Code’s priority scheme. This Comment argues that structured dismissals are permissible under the Code, but they cannot deviate from the priority scheme.

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