Corporate Reorganization Law and Forces of Change

This book is concerned with the way in which forces of change, from the fields of finance and non-financial corporates, cause participants in the corporate reorganization process to adapt the ways in which they mobilize corporate reorganization law. It argues that scholars, practitioners, judges, and the legislature must all take care to connect their conceptual frameworks to the specific adaptations which emerge from this process of change. It further argues that this need to connect theoretical and policy concepts with practical adaptations has posed particular challenges when US corporate reorganization law has been under examination in the decade since the financial crisis. At the same time, the book suggests that English scholars, practitioners, judges, and the legislature have been more successful, over the course of the past ten years, in choosing concepts to frame their analysis which are sensitive to the ways in which corporate reorganization law is currently used. Nonetheless, it suggests that new problems may be on the horizon for English corporate reorganization lawyers in adapting their conceptual framework in the decades to come.

The Rise of Secured Credit

This chapter explores the way in which the shifts in the fields of finance and non-financial corporates discussed in Chapters 3 and 4 have led to changes in US secured transactions law. It examines the way in which these changes have, in turn, shifted bargaining power towards secured creditors when a debtor attempts to reorganize its debt and equity finance. However, the argument is made that this gives rise to different issues from the traditional concern for secured creditor liquidation bias when it is set in the wider organizational and institutional environment which the book has begun to examine. Turning to England, the chapter explores how the English courts have generally supported the allocation of control rights in distress to senior financial creditors. It reveals why this has, once again, made English corporate reorganization law particularly well adapted to the demands of the past decade.

Introduction

Chapter 1 briefly maps the traditional contours of the debate between economically orientated and progressively orientated scholars of US corporate reorganization law. Specifically, it identifies a group of concepts which have come to embody the disagreement between these scholars. It introduces the argument in the book that these concepts are less salient when certain adaptations of corporate reorganization law are examined, and that policy and analytical missteps arise if they continue to be adopted uncritically. It further introduces the comparative aspect of the book, which examines why different issues have arisen for scholars, practitioners, judges, and the legislature examining English corporate reorganization law. Moreover, it identifies what purpose the comparative approach serves for the work as a whole.

The Rise of Leverage

This chapter explores the first of the changes in logic and practice in the fields of finance and non-financial corporates with which the book is concerned: the rise of the leveraged capital structure. It explores the implications of the leveraged capital structure for the ways in which corporate reorganization law is mobilized and adapted by the participants in the corporate reorganization process. It argues that the first step in analysing these new adaptations is to focus on the concepts which are used to describe them. It further argues that when this is done certain implications are revealed for current debates about the content and reform of US corporate reorganization law. It argues that England has had fewer problems in framing appropriate concepts for analysing the new adaptations which are under examination in the chapter. However, it hints at potential challenges for England for the future, developed later in the book.

Looking to the Future

It is an organizing principle of the book that modern corporate reorganization law responds to different patterns of fact in diverse and complex ways, and this chapter explores other types of corporate reorganization case beyond financial restructuring. It argues that the analysis of these types of case may depend more fundamentally on the lens through which they are viewed. Furthermore, it suggests that there are reasons to suspect that there may be an increase in some of these other types of case over the next decade. This provides the framework in which to investigate the claim in the book that English scholars, practitioners, judges, and the legislature may face challenges in connecting concepts which are well adapted to a reorganization of loan, bond, and equity finance arrangements to new adaptations of corporate reorganization law.

Initial Conditions and Emergence of Corporate Reorganization in the United States and England

This chapter is a scene-setting exercise, offering a brief and highly selective review of almost one hundred years of corporate reorganization in the US and England. It seeks to provide some explanation for the very different ways in which corporate reorganization developed in each jurisdiction. Overall, its purpose is to help to sketch out the conditions which prevailed when the account in the book really begins in the 1970s, and how they offer significant explanatory power for the way in which corporate reorganization law and practice emerges in each jurisdiction. Specifically, the chapter investigates the relatively stable corporate reorganization law and practice which prevailed in each jurisdiction for much of the twentieth century, and, in each case, the institutional logics, practices, and identities which gave rise to it.