Emory Bankruptcy Developments Journal

Volume 34Issue 2
The Fifteenth Annual Emory Bankruptcy Developments Journal Symposium

Far from the Madding Crowd: Crowdfunding a Small Business Reorganization

Anthony Tamburro | 34 Emory Bankr. Dev. J. 521 (2018)

This Comment proposes a framework by which bankruptcy courts can analyze cases involving non-equity crowdfunding and small business debtors. The framework is best described in the context of four questions likely to be raised by the creditors of a crowdfunding debtor. Using these questions, a court evaluates these cases with an eye towards promoting trust in the crowdfunding sector. By explaining the proposed framework through the eyes of a fictional small business, this Comment argues that courts can answer creditors’ questions in a way that both satisfies the twin aims of bankruptcy and protects the integrity of the crowdfunding system.

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A Constitutional Tango of Judicial Interpretation: The Instability of Bankruptcy Court Authority under Article III

Kevin H. Kim | 34 Emory Bankr. Dev. J. 561 (2018)

Despite historical and modern developments, the heart of bankruptcy law centers around providing fresh starts to those who find themselves in severe financial distress. Congress created bankruptcy courts to help efficiently and effectively facilitate this goal. However, the complexity of debtor-creditor relationships necessitates that most bankruptcy proceedings hear a variety of claims, some of which may not arise out of the bankruptcy itself but are still required for bankruptcy resolution. Consequently, the authority of bankruptcy courts to hear all relevant claims is an essential component of bankruptcy relief. Bankruptcy Courts are not granted authority under Article III of the Constitution, but under Article I. This Comment explores the dynamic relationship between non-Article III bankruptcy courts and Article III judicial authority, and how this unstable relationship affects the facilitation of bankruptcy goals

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Codification and Clarity: Debt Recharacterization

Rebecca S. McMahon | 34 Emory Bankr. Dev. J. 603 (2018)

Judicial recharacterization is a judge-made doctrine that allows a court to recharacterize a creditor’s claim as an equity investment. Courts use judicial recharacterization as a mechanism to reorder the priority of payments if the judge believes that the true nature of the transaction has the characteristics of an equity relationship from the outset, despite being classified as a loan. Recent debate has centered around the unwieldy and unpredictable nature of these recharacterizations. Creditors often face dramatic differences in the outcome of litigation depending on the jurisdiction in which their claim arises. Courts facing questions of judicial recharacterization have analyzed these aspects in dramatically different ways creating a split among the circuit courts on all three aspects. This Comment argues for the codification of the doctrine of judicial recharacterization.

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Bankruptcy Courts’ Authority under § 505

David W. Patton | 34 Emory Bankr. Dev. J. 643 (2018)

Section 505 of the Bankruptcy Code allows a court of determine tax related issues. Apart from three narrow exceptions contained within the provision, bankruptcy courts’ authority under § 505 is essentially limitless. The broad language of § 505 extends bankruptcy courts’ authority far beyond the context of bankruptcy, and courts have acknowledged that the plain meaning of the statute effectively creates a second tax court system. Interpreting § 505 in this manner raises constitutionality and federalism concerns and is ostensibly impractical. For these reasons, courts have taken three general approaches to define the extent of bankruptcy courts’ authority under § 505. This Comment evaluates these three approaches and examines other limitations and mechanisms that courts have utilized to restrict bankruptcy courts’ authority to adjudicate § 505 proceedings. It concludes that the “arising under” approach is the ideal solution to § 505 because it emphasizes practicality while adhering to statutory canons and the goals of bankruptcy.

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Maximizing the Value of Privacy through Judicial Discretion

Daniel Brian Tan | 34 Emory Bankr. Dev. J. 681 (2018)

In corporate bankruptcies, regulations encourage the de-identification of consumer information and the restriction of sales to a limited pool of qualified purchasers operating in a similar industry. Judicial discretion is used to transfer privity from a debtor to a qualified purchaser. Both de-identification and the qualified purchaser requirement reduce consumer data values in bankruptcy and provide only a thin veil of protection. This Comment argues that courts should use their discretion to alter not only the privity among parties but also the terms of purchase in bankruptcy to maximize the value of consumer data claims.

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Contemplating Claims Tradings at the Margins

John Folkerth | 34 Emory Bankr. Dev. J. 723 (2018)

Claims trading, the buying and selling of creditor claims, is a common part of modern bankruptcy. Most scholars denounce claims trading as a disruptor in the bankruptcy process. What the current research fails to recognize is that confining the analysis on claims trading to the single greatest-frequency period leads to incomplete theories. In reality, claims trading takes place outside of this period as well. When reexamined outside of the mainstream’s contexts (i.e., prior to the petition date or after plan confirmation), claims trading can offer significant benefits. Trading at these periods fosters healthier bargaining between the debtor and its creditors and enhances the likelihood of a swift procedure. Thus, bankruptcy constituents should contemplate and, moreover, endorse claims trading at either the pre-petition or post-plan confirmation phases to ease concerns about a trade’s disruptive capacity inside a bankruptcy case.

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