Emory Law News Center

EBDJ covers pressing bankruptcy issues in newest edition
By Emory University School of Law | Emory Law | December 5, 2016

Jake Jumbeck 17L:
Emory Law Journal editor in chief

EBDJ covers pressing bankruptcy issues in newest edition

In its recently released issue, the Emory Bankruptcy Developments Journal addresses two pressing matters in bankruptcy: the scope of a bankruptcy court’s jurisdictional power and the appropriate method to determine the cramdown interest rate in chapter 11. The EBDJ is privileged to have insights on these issues from three of the most well-regarded scholars in the field: Ralph Brubaker, the Carl L. Vacketta Professor of Law at the University of Illinois; Bruce A. Markell, Professor of Law and Bankruptcy Practice at Northwestern University’s Pritzker School of Law; and Anthony J. Casey, Professor of Law and Mark Claster Mamolen Teaching Scholar at the University of Chicago Law School. 

Since the Supreme Court’s decision in Stern v. Marshall, 564 U.S. 462 in 2011, the scope of a bankruptcy judge’s jurisdictional authority has been unclear. The Court’s subsequent decision in Executive Benefits Insurance Agency v. Arkison, 134 S. Ct. 2165 clarified a bankruptcy court’s jurisdictional power somewhat, but it still left the exact contours unclear. The Supreme Court clarified this issue in 2015 in Wellness International Network, Ltd. v. Sharif, 135 S. Ct. 1932.

Professor Brubaker developed a piece on the scope of a bankruptcy court’s authority that accomplishes two goals. First, he incorporates the Wellness decision into the landscape of non-Article III adjudication. Second, he traces the Supreme Court’s longstanding role in defining the historical distinction between summary and plenary matters. He then uses the Wellness decision to demonstrate several approaches the Supreme Court has used to differentiate between summary matters and plenary suits.

Regarding the appropriate method to determine the cramdown interest rate in chapter 11, this edition explores how the 2004 Supreme Court decision in Till v. SCS Credit Corp., 541 U.S. 465, which decided this issue in the chapter 13 context, did not offer clear guidance in chapter 11,. In Till, the Court held that formula approach, requiring an adjustment of the prime national interest rate based on the debtor’s risk of nonpayment, was the appropriate method for determining the adequate rate of interest in chapter 13 cramdown situations. But is that the appropriate rate in chapter 11? Is it “what rate an efficient market would produce”? Or is it the method the Till Court determined? The Supreme Court did not answer that question in Till.

Professors Markell and Casey developed separate pieces on the proper method to determine the cramdown interest rate in chapter 11 after the Bankruptcy Court for the Southern District of New York’s decision in Momentive Performance Materials. Professor Markell argues that Till is the appropriate method. He traces the statutory history of § 1129(b) and caselaw to arrive at his conclusion. Professor Casey takes the opposite side. He argues that the optimal cramdown rule is one that is based on the prevailing market rates for similar loans. Throughout his article, Professor Casey shows that this approach is consistent with the Bankruptcy Code and even Professor Markell’s argument.

All three professors will be panelists at the Journal’s Fourteen Annual Symposium on February 23, 2017 where they will discuss the Second Circuit’s forthcoming decision in Momentive. “The EBDJ is honored to have timely and insightful pieces on these issues from Professors Brubaker, Markell, and Casey. They have provided the intersection of practice and scholarship on which the Journal prides itself, and we are truly indebted to them,” said Jake Jumbeck 17L, this year’s editor-in-chief.