Emory Bankruptcy Developments Journal

Volume 35Issue 1
A Tribute to The Honorable Mary F. Walrath

Introduction: A Tribute to The Honorable Mary F. Walrath

Mark D. Gensburg | 35 Emory Bankr. Dev. J. 1 (2019)

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 March 29, 2018, the Emory Bankruptcy Developments Journal presented The Honorable Mary F. Walrath with the Twentieth Annual Distinguished Service Award for Lifetime Achievement.

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Opening Remarks

David A. Wender | 35 Emory Bankr. Dev. J. 3 (2019)

David Wender’s remarks highlight his time clerking for Judge Walrath and articulate the lessons of perseverance, mentorship, rule adherence, and reputation maintenance that Judge Walrath taught him.

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Acceptance Remarks: Mary F. Walrath Lifetime Achievement Award

The Honorable Mary F. Walrath | 35 Emory Bankr. Dev. J. 7 (2019)

Acceptance remarks by The Honorable Mary F. Walrath at the Emory Bankruptcy Developments Journal Banquet. Judge Walrath reflected on her career, thanked those who helped her along the way, and shared advice on how to have a fruitful and fulfilling legal career.

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Stern Claims and Article III Adjudication—The Bankruptcy Judge Knows Best?

Laura B. Bartell | 35 Emory Bankr. Dev. J. 13 (2019)

This excellent Article by Professor Laura B. Bartell explores how Stern claims have been treated since the Supreme Court decided Arkison and Wellness. This Article studies these claims by analyzing 495 cases in which a bankruptcy court mentioned “Stern v. Marshall,” cited Arkison, or cited Wellness. From this study, the Article concludes that bankruptcy courts find few core proceeding that they decide are covered by Stern and thus are beyond the bankruptcy court’s constitutional power to decide. This Article further concludes that even when a bankruptcy court questions its authority to hear a matter, the litigants will usually consent to the court’s judgment. Where litigant consent is not present, this Article finds that district court almost always adopts the bankruptcy court’s finding of fact and conclusion of law.

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Not a Bank, Not a SIFI; Still Too Big to Fail

Oscar Couwenberg & Stephen J. Lubben | 35 Emory Bankr. Dev. J. 53 (2019)

This outstanding Article by Professors Oscar Couwenberg and Stephen J. Lubben explores the financial collapse of too big to fail non-bank firms. The Article analyzes the level of government involvement in various large insolvencies around the world, placing each case into one of four categories: standard bankruptcies, bankruptcies with government support, ad hoc solutions, and full bailouts. After considering the benefits of each approach, this Article concludes that either a standard bankruptcy procedure or a bankruptcy procedure with government support is preferable to an ad hoc solution or a full bailout. The authors artfully balance the moral hazard associated with the “too big to fail” argument, and present a forceful argument for a bankruptcy procedure that is capable of handling extremely large debtors.

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The Enforcement of Consensual Foreign Plans of Reorganization in Chapter 15

Thiago Braga Junqueira | 35 Emory Bankr. Dev. J. 81 (2019)

This intriguing Article by Thiago Braga Junqueira argues that variations in the voting requirements between domestic and foreign bankruptcy regimes should not prevent an American bankruptcy court from giving deference to foreign courts’ confirmations of plans of reorganization. While the U.S. Bankruptcy Code has endorsed a supermajority threshold for a chapter 11 plan to be consensually confirmed, many foreign bankruptcy regimes have lower thresholds. The author persuasively contends that deference to a foreign main proceeding is consistent with the goals and purposes of the Modern Law on Cross-Border Insolvency and chapter 15. The Article concludes by calling for comity and deference when a foreign plan is confirmed at less than the American supermajority threshold.

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Collateral Damage: Non-Debtor Recovery for Bad Faith Involuntary Bankruptcy Petitions

Seth Webster | 35 Emory Bankr. Dev. J. 111 (2019)

When a creditor initiates an involuntary bankruptcy, third parties can be imperiled as much as the debtor. Where an involuntary bankruptcy is filed in bad faith, these third parties may be subject to serious collateral harm. While no court has awarded collaterally harmed third parties damages arising from an involuntary bankruptcy, the Third Circuit has recently open the door for some form of non-debtor recovery. In 2016, the Third Circuit declared that non-debtor third parties could seek a recovery for damages arising from an involuntary petition in state court. After analyzing this issue, the author proposes a hybrid approach for making harmed third parties whole.

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A Bankruptcy Litigation Framework for Series LLC Eligibility, Property of the Estate and Substantive Consolidation

Thomas J. McElhinney | 35 Emory Bankr. Dev. J. 151 (2019)

The Series LLC is a new and idiosyncratic business entity that presents unique questions of law in the bankruptcy context. The Series LLC shields its members from liability and limits liability between various business endeavors. However, this multi-faceted liability protection creates several questions. These include: whether the Series LLC is eligible for bankruptcy, how to deal with the yet untested limited liability protection of different business endeavors, and whether the Series LLC’s multi-directional liability protections run contrary to federal bankruptcy policy. After responding to these concerns, the author proposes a bankruptcy litigation framework to address uncertainty surrounding Series LLC bankruptcy eligibility and create a level playing field.

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Closing the Loophole in Commercial Landlord Bankruptcies: Why the Ninth Circuit Made the Right Decision in Matter of Spanish Peaks Holdings II, LLC

Bradford N. Barnhardt | 35 Emory Bankr. Dev. J. 191 (2019)

When it decided Matter of Spanish Peaks Holdings II, LLC, the Ninth Circuit exposed a major loophole in the Bankruptcy Code relating to landlords and tenants. This loophole may be exploited by shrewd real estate developers who create two corporate entities and place each into a landlord-tenant relationship, with the lease’s terms heavily favoring the tenant corporate entity. Creating this artificial landlord-tenant relationship would permit the tenant entity to retain possession of the property should the landlord entity ever have to file for bankruptcy. This would permit the developer to receive a financial windfall either in the form of a buyout of the tenant entity’s lease by a third-party purchaser, or by the continued operation of the tenant entity’s business on the purchaser’s land. The author analyzes the majority and minority approaches to this loophole, and ultimately argues that the minority approach is more pragmatic. The author then proposes a way for judges to fashion adequate protection to lessen the effect of an undeserving tenant’s recovery.

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Third-Party Relief for Municipal Debtors: “Necessity” in the Chapter 9 Context

Christian Morbidelli | 35 Emory Bankr. Dev. J. 225 (2019)

Bankruptcy courts have often used “third-party releases” in the chapter 11 context to release certain non-debtors from liabilities. As chapter 9 municipal bankruptcies have become more numerous, debtors have sought third-party relief there as well. The author categorizes these chapter 9 cases into two categories. The first involves cases where the State provides funds to the reorganization effort in exchange for some creditors giving up claims against the State. The second consists of cases where a city attempts to relieve its police officers of liability for civil rights violations by including injunctions against the civil rights plaintiffs in the city’s plan of reorganization. The author argues that the second category of cases have ignored fundamental limitations on third-party relief and allow debtors to exploit a test that was not intended for chapter 9 bankruptcy. This leads the author to propose replacing the “necessity” standard with one suited for municipal bankruptcies.

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It’s Not You, It’s Us: Assessing the Contribution of Trademark Goodwill to Properly Balance the Results of Trademark License Rejection

Clayton A. Smith | 35 Emory Bankr. Dev. J. 267 (2019)

In 1988, Congress amended § 365 of the Bankruptcy Code to allow intellectual property licenses to retain usage rights following the rejection of an executory contract. Unfortunately, this amendment did not include trademarks in its definition of intellectual property. The author thoroughly examines the circuit split, comparing and contrasting the dueling circuit court decisions over whether trademark licenses should receive the same protections as other intellectual property. In analyzing this circuit split, the author centrally focuses on Mission Product Holdings, Inc. v. Tempnology, LLC, a case out of the First Circuit Court of Appeals. The author concludes by proposing a three-factor test to aid courts in arriving at the most equitable result for not only the debtor’s estate, but also society writ-large.

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