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This paper examines how a firm’s financial distress and the legal environment regarding the ease of bankruptcy reorganization can alter product market competition and supplier–buyer relationships. We identify three effects—predation, bail-out, and abetment—that can change firms’ behavior from their actions in the absence of financial distress. The predation effect increases competition before potential bankruptcy as the nondistressed competitor behaves as if it has some first-mover advantage that could benefit a supplier with price control. The bail-out effect reflects the supplier’s incentive to grant the distressed firm concessions to preserve competition, improving supply chain efficiency and providing support for the exclusivity rule in Chapter 11 of the United States Bankruptcy Code when the supplier and the distressed firm are financially linked. The abetment effect is that the supplier may deliberately abet the competitor’s predation, leading to increased operational disadvantages for the distressed firm before bankruptcy. Together these effects stress that a firm’s bankruptcy potential can hurt its competitors and benefit its suppliers/customers. They also provide guidelines for firms’ operational decisions in such situations, a rationale for observed firm actions surrounding bankruptcies, and motivation for policies supporting reorganization and relaxing broad enforcement of nondiscriminatory pricing regulations. This paper was accepted by Serguei Netessine, operations management .

Chapter 11 of the 'Bankruptcy Code' is often justified by vague assertions that reorganizing troubled companies is in the \"public interest.\" There has, however, been surprisingly little effort to consider seriously what this public interest is, how it should be operationalized, or who should pay for it. Based on a case study of the controversial bankruptcy of crypto complex FTX, this article develops a three-part typology of public interests at stake in chapter 11 and shows how they can conflict with one another and with private interests: (1) the paramount public interest in the integrity of the judicial process; (2) bankruptcy-specific public interests in maximizing value through efficient, consolidated proceedings; and (3) \"other\" public interests, such as the prosecution and defense of serious crimes. We place FTX's counsel, Sullivan and Cromwell (SandC), at the center of this triptych. We present evidence indicating that SandC had undisclosed potential conflicts of interest due to apparent errors, omissions, and deceptions in their work for the company and its founder, Sam Bankman-Fried, before, at, and during the bankruptcy, thereby undermining the first-order public interest in procedural integrity. SandC's role as debtor's counsel has cast a troubling shadow over puzzling and costly decisions in the case, thereby undermining a second, bankruptcy-specific form of the public interest: maximizing an estate's value. SandC often justified its actions by reference to the third, \"other\" facet of the public interest. Namely, SandC touted that it supported the prosecution of disfavored insiders such as Bankman-Fried. But that pricey task - for which SandC billed millions of dollars - may have distorted the prosecutions without producing observable economic benefit to the bankruptcy estate. FTX is a cautionary tale about the power that lawyers have to frame, control, and profit from claims about the public interest in chapter 11. An examiner appointed late in the case largely exonerated SandC, although he engaged little of the evidence we present. This is not surprising because SandC's resistance to that intervention left a narrow scope and little time for his investigation. We situate our findings in a nascent body of literature exploring the public interest in bankruptcy. We suggest that the experience with SandC in FTX May reflect larger patterns in reorganization reminiscent of historical concerns about distorted incentives in restructuring processes. To ameliorate these concerns, we offer guidance to improve the functioning of the principal custodians of the public interest in chapter 11. Courts should more carefully police pre-bankruptcy connections of estate professionals and should use preliminary examinations more frequently. We further believe that the United States Trustee should have greater independence from other government actors so it can fulfil its watchdog mandate without compromise.

Does social enterprise end with insolvency? Is bankruptcy all about the bottom line? The answer to these questions begins with understanding the estate in bankruptcy and the fiduciaries that control its fate. Yet the law of fiduciary duties in bankruptcy is undertheorized, conflicted, and muddled. After almost fifty years of confusion, this Article provides the first comprehensive examination of the nature and source of fiduciary duties in bankruptcy. Although the Supreme Court has intoned \"maximize the value of the estate\" as a shorthand, this Article argues that the trustee's duty of obedience in reorganization cases gives rise to a \"duty to facilitate a plan\" or, as I call it, a \"duty to clear runway.\" It also concludes, based on 28 U.S.C. [section] 959, that the trustee must observe state law fiduciary duties that would otherwise have governed the debtor outside of bankruptcy. Trustees of benefit corporations, for example, must not pursue money-maximization above all else but must balance pecuniary interests against the public benefit set forth in the debtor's articles, such as preserving employment, protecting the environment, or supporting the local economy. For their part, creditors and debtors alike have opportunities to advocate for public-minded goals in bankruptcy cases as part of official committees or, in a novel twist, a \"benefit committee.\" And indeed, some creditors, like debtor-in-possession (\"DIP\") lenders, may step into a fiduciary relationship with the bankruptcy estate if they wield extraordinary control over the estate's decision-making. The timing is right for a rethinking: As the social enterprise ecosystem finds itself caught up in bankruptcy proceedings, creditors and debtors alike may wish to press for their vision of value. This vision for bankruptcy law is both capacious and controversial: It would allow for a wider range of values to be pursued during the plan negotiation process and could reshape bankruptcy practice for social enterprises.

[...]Part IV of this Note will provide suggestions and conclusions on how Chinese bankruptcy law can further change to better address these issues. \"9 As early as 2019, the NPC Financial and Economic Committee started preparing the revision drafts of the existing Enterprise Bankruptcy Law.10 It is thus foreseeable that the first significant amendment since the enactment of the law is gradually approaching.11 Currently, Article 18 of the Enterprise Bankruptcy Law of the People's Republic of China is the most commonly used provision in Chinese law governing the relationship between retail companies and suppliers.12 According to Article 18, the administrator, after the court accepts the bankruptcy application, shall have the authority to decide whether to rescind or continue to perform a contract that was concluded before acceptance but remains to be fulfilled by both the debtor and the other party.13 Under the provisions of Article 18, vendors who signed a contract with the debtor before entering bankruptcy and where both parties have unfulfilled obligations, the administrator can handle them in three ways: 14 The first option is to terminate the contract.15 Any debts arising from the original contract after termination will be treated as unsecured debts and settled according to the reorganization plan.16 The second option is to \"confirm\" the contract.17 The administrator may assume (\"confirm\" under Chinese law) the contract, and it will remain valid for both parties.18 The vendor will be obligated to continue supplying goods under the contract. [...]the overly simplistic wording of this Article and the lack of related rules have led to significant uncertainty, resulting in numerous criticisms.25 B. Supplier Creditor under U.S. Bankruptcy Code A similar rule to Article 18 can be found in U.S. bankruptcy code, specifically in 11 U.S.C. § 365, which deals with Executory Contracts.26 There are also three ways a trustee can deal with the executory.27 The first is assumption.28 The assumption of executory contract means to \"continue[] both parties\" obligations, and provides priority for the counter-party with regard to the future obligations owed by the debtor to ensure that it [is] fair to compel the counter-party to continue under the contract notwithstanding the bankruptcy.29 The Bankruptcy Code does not expressly deal with the consequence of assumption, but it is clear from case laws that under this circumstance, the contract will still be valid for both parties and the debt under the contract will have an administrative expense priority.30 The second way is rejection.31 Rejection means it will \"relieve[] the debtor of its future performance obligations . . . the debtor's decision to reject a contract operates as a breach as of the date of the bankruptcy filing, allowing the counterparty to make claims against the debtor for that breach, albeit in the form of a claim in the bankruptcy. According to the legislative history, \"though there is no precise definition of what contracts are executory, it generally includes contracts on which performance is due to some extent on both sides.39 From a practical perspective, the most widely accepted definition of an executory contract is \"a contract where there remains unperformed material obligations by both parties at the time the bankruptcy is filed.

[...]the article explains the key issues that arise during a bankruptcy that are relevant to the franchise industry, including the automatic stay and the contract assumption and rejection process. [...]there is an intersection of state franchise law with bankruptcy law. [...]it is important for a potential debtor to understand its filing options. [...]a franchisor may contest a franchisee's bankruptey, either by proving a discharge exception or seeking dismissal of the bankruptcy case.

Last month, Arkansas Securities Commissioner Susannah Marshall asked U.S. Bankruptcy Court Judge Richard Taylor to dismiss Rucker's bankruptcy case or, if not, rule that Rucker's debts owed to Arkansas investors are nondischargeable. ASD said in its cease and desist order that Rucker used Seatbeltguard's bank account as his own personal account. The ASD also said that Rucker left out key facts to investors, such as failing to mention that he pleaded guilty to two counts of bank fraud and aiding and abetting in 2001 and was sentenced to one day in prison and ordered to pay $22,850 in restitution Rucker also bragged to investors that large companies and wealthy people were lined up to buy his companies, the ASD said.

LAW Rapid P&P LLC hopes to save money and be out of bankruptcy reorganization quicker by using a bankruptcy procedure that went into effect in February 2020. [...]the debtor doesn't have to file disclosure statements for its reorganization plan, \"so that's a tremendous savings in time, energy and effort,\" Bond said. The speed with which a debtor could move through bankruptcy could save a company at least 10% in bankruptcyrelated fees, making it more likely that the company will emerge from bankruptcy, he said.

[...]how are schemes used to resolve outstanding claims by creditors and how much of the value is distributed among creditors and shareholders? [...]has the restructuring process resulted in considerable delay, potentially prejudicing creditors where the moratorium/stay of proceedings is in force? BACKGROUND The English scheme7 differs in many respects from Chapter ll.8 Chapter 11 is a debtor in possession regime where the management remains firmly in the control of the debtor company, allows for the cram-down of entire classes of creditors (not only within classes), has a robust automatic stay and sophisticated tools to deal with pre-packs and super-priority financing, and also sophisticated methods to deal with valuation of the enterprise.9 The English scheme has been spoken of as a model for 'early stage' restructuring procedures.10 Although the scheme functions as Singapore's de facto debtor-in-possession restructuring regime, it does not have any bankruptcy or insolvency stigma since it is a procedure based on company law rather than insolvency law. The inherent flexibility of a scheme of arrange' ment has proved particularly valuable in such cases where the existing financing agreements do not contain provisions permitting voluntary modification of their terms by an achievable majority of creditors, or in cases of pan-European groups of companies where co-ordination of rescue procedures or formal insolvency proceedings across more than one country would prove impossible or very difficult to achieve without substantial difficulty, delay and expense.16 The traditional English scheme procedure lacks certain features of Chapter 11 including the automatic stay, cram-down of creditors across classes and provision for new financing on a priority basis.17 In 2017, Singapore decided to amend its insolvency and restructuring laws with a view to enhancing its attractiveness as an international centre for debt restructuring.18 Central to these reforms is the engrafting (with modification) of certain provisions from Chapter 11, including an enhanced moratorium (that functions similarly to the automatic stay under the bankruptcy code),19 cross-class cram-down, pre-packed schemes (pre-packs) and super-priority financing.

The law mandated that Arkansas dairy farmers receive a higher price for their milk. [...]of the amended law, Hiland Dairy's plants in Arkansas refused to accept milk from Arkansas producers, said Helms, who has a contract with Dairy Farmers of America. In 2022, DFA filed a lawsuit in federal court in Little Rock challenging the constitutionality of the law change requiring processors to pay the Arkansas dairy farmers the higher rate for milk.