This is a conversational text that provides a comprehensive view of the law of American business failure.

The second edition of the first and only concise introduction to American business insolvency law, this volume provides a succinct overview of American business bankruptcy as it is actually practiced, integrating the law as written and implemented, and now includes coverage of the Small Business Reorganization Act.

Designed for use in the Corporate Finance class, increasingly important in any skills-based curriculum, this casebook features a strong coverage of M&A, bankruptcy, finance, and valuation. The valuation unit covers math from a lawyer's perspective, focusing on the intuitions behind the valuation techniques in a way that will facilitate interaction with bankers and accountants in practice. Basic Excel skills are taught along the way. The second edition has been updated to include the most recent developments through 2017, and includes leading recent decisions from the New York Court of Appeals, United States Court of Appeals for the Second Circuit, the United Kingdom Supreme Court, and the Supreme Court of Canada, reflecting the increasingly global nature of corporate finance. Key Features: · The author, Stephen J. Lubben holds an endowed chair in corporate governance at Seton Hall and is the "In Debt" columnist for the New York Times's Dealbook page · Mathematically sophisticated but accessible, focusing the quantitative tools on motivating and understanding the business and concepts · Includes and refers extensively to deal documents throughout to establish a theme of the actual transactions to compare to the lines of cases describing how deals go bad · Practical, transactional approach to corporate finance · Organized around four basic units: valuation, finance, mergers and acquisitions, and financial distress

To Protect Their Interests is a groundbreaking historical account of how corporate bankruptcy became what it is today--a forum for battles between well-heeled insiders.

It is widely believed that big chapter 11 cases are now routinely done by way of a quick 363 sale, followed by a not quite as quick liquidation of the residue of the debtor, along with a distribution of the sale proceeds. Indeed, commentators widely bemoan the fact that debtors arrive in chapter 11 with no choice but to do a quick sale, because their lenders won't permit anything else.In this paper, I argue that the roots of the issue are corporate governance, and not bankruptcy. That is, if the tendency for debtors to show up in chapter 11 with no option but to engage in a quick sale process is a problem, that problem has its roots in non-bankruptcy corporate law.I then begin the process of explaining how the decision to lock a company into an all-encompassing secured loan, and thus a likely quick 363 sale, should be regulated. Namely, I argue that ultimately this is a question of state law fiduciary duties, and that the foundation for this duty already exists in the Delaware Supreme Court's oft maligned Omnicare, Inc. v. NCS Healthcare, Inc. In short, state corporate law imposes a duty on the board to carefully consider any decision that will foreclose a future board's choices. In times of financial distress, this duty includes an obligation to carefully consider the effects of a particular decision on future restructuring options.

Nearly thirty years of chapter 11 scholarship offers little insight into the reasons why certain firms are unable to confirm a reorganization plan. This paper offers the first empirical model of why firms fail in chapter 11. Using a database of 945 chapter 11 cases filed in 2004, and a simple definition of chapter 11 failure as any case that is converted to chapter 7 or dismissed, I show that some of the most significant predictors of quot;failurequot; are observable on the first day of a chapter 11 case.

In early 2005, the American Bankruptcy Institute awarded me a $345,000 grant to conduct the most comprehensive, independent empirical study of professional fees in chapter 11 cases to date. This report represents the results of that study.

This book examines the costs of both large Chapter 11 cases, that are the subject of much academic and popular attention, and the more typical Chapter 11 cases that are numerically more common. The book calls for a more subtle, less combative examination of Chapter 11. Given the current economic reality in the US, the debate is of special importance. Author S.J. Lubben's findings include: ** the time spent in Chapter 11 has no relationship to cost once a fully specified model is considered. ** references to a professional's "burn rate" are thus misleading, inasmuch as it implies a fixed or constant cost to Chapter 11. Costs ebb and flow through the course of the case. ** repackaged Chapter 11 cases are not significantly cheaper than regular Chapter 11 cases. ** cases filed in New York or Delaware do not cost more. In fact, these jurisdictions seem to actually reduce Chapter 11 costs, likely because of their greater experience with complex Chapter 11 cases. ** fee examiners do not reduce the costs of big Chapter 11 cases. ** the complexity and compensation structure of the professionals retained, which may itself reflect further aspects of complexity, are the key determinants of cost. Debtor size is but a loose proxy for these factors, but is itself of reduced relevance once a fuller model is developed. ** complexity is associated with economies of scale, resulting in lower Chapter 11 costs for the largest, most complex cases.

For almost as long as there have been bankruptcy laws, there have been complaints that the primary beneficiaries of these laws are insiders who administer the bankruptcy system. In recent decades, this line of criticism has carried with it an implicit criticism of bankruptcy courts, who are urged to more aggressively police the costs of bankruptcy. Indeed, at least one recent critic has unkindly suggested that the failure of the courts to control bankruptcy costs is the result of a corrupt bargain between bankruptcy courts and practitioners. Rarely addressed is why bankruptcy courts regulate professional costs at all. In most areas of American law, a professional is accountable solely to its client. Complaints about excessive cost might result in a separate malpractice action, but a client who thinks they have been overcharged for the defense of their speeding ticket will find little relief in traffic court. Why is bankruptcy different?This paper begins to look at this question with brief overview of the concept of bankruptcy costs, traditionally divided between direct and indirect costs. I next turn to a consideration of the process for overseeing bankruptcy costs. I briefly trace the history of court control of compensation in corporate bankruptcy, and then detail the current legal structure. The final part of the chapter then surveys the existing understanding of chapter 11 cost, and concludes with a some thoughts on the important questions that remain unanswered.In short, we know a bit about direct costs, but very little about any other sort of costs. Moreover, what we know is almost entirely lacking in context. This makes it quite hard to understand if the existing system of cost regulation is either useful or justified.