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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.

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.

[...]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.

In June 2024, the United States Supreme Court ruled in Harrington v. Purdue Pharma that nonconsensual releases for nondebtors are unconstitutional. The decision marked a key development in mass tort litigation involving Purdue Pharma, the company at the center of the opioid crisis. The Sackler family sought to use Purdue's bankruptcy proceedings to shield themselves from liability, but the Court's ruling invalidated the use of nondebtor releases to protect third parties from claims without the full consent of affected parties. While the ruling strengthens creditor protections, it creates uncertainty regarding how mass tort bankruptcies can efficiently compensate victims, particularly in public health crises with long-term effects.

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.

The conventional wisdom holds that out-of-court loan restructurings are mostly consensual and collaborative. But this is no longer accurate. Highly aggressive, nonconsensual restructuring transactions--what I call \"hostile restructurings\"--are becoming a common feature of the capital markets. Relying on hypertechnical interpretations of loan agreements, one increasingly popular hostile restructuring method involves issuing new debt that enjoys higher priority than the existing debt; another involves transferring the most valuable collateral away from existing lenders to secure new borrowing.