Fall 2023 • Course
Bankruptcy
Exam Type: In Class
This basic bankruptcy course covers the major facets of bankruptcy that affect business financing transactions.
Much of the dealmaking in a financing transaction entails lawyering in anticipation of a possible reorganization in Chapter 11 or of an out-of-court restructuring in its shadow. That is, corporate lawyers often negotiate loans for their business clients; the lawyers and the clients are typically establishing the terms that will prevail if the company fails and goes bankrupt. Similarly, regulators, creditors, and employees of shaky companies want to know what will happen if the company goes bankrupt. For many lawyers, contact with bankruptcy law is anticipatory and not in front of the bankruptcy judge. Hence, when we examine the major facets of business bankruptcy, we will do so with an eye to understanding how these facets affect financing transactions and business deals. Along the way we will see how bankruptcy law governs labor relations in weakened firms, how it handles mass torts (such as those emanating from the opioid crisis), how it affects private equity and leveraged buyout deals, and how it handles contracts of, and sales to and from, firms that could end up going bankrupt.
When feasible, students will read not just bankruptcy court opinions and the Bankruptcy Code, but materials that financing lawyers use day-to-day: a loan agreement, a prospectus, a complaint in a loan dispute, and submissions to government regulators. To the extent possible, we will use case law to decode not just the governing doctrine, but also what the underlying transaction was and how bankruptcy law affected the parties’ thinking and the deal’s terms. Students will ordinarily participate in a simulated Chapter 11 reorganization toward the end of the semester.