Substantive consolidation is a process in corporate bankruptcy in which the assets of related debtor entities are placed into a single vehicle subject to the undifferentiated claims of all the creditors. Doing so resolves inter-debtor claims and vindicates the interests of creditors who thought they were transacting with a unitary debtor, albeit at the expense of those who relied on a strict separation of entities. The Note argues that these functions would be more properly executed under a cause of action created by state law than under federal law. Part I of the Note examines the current law of substantive consolidation in the context of federal bankruptcy law and state corporate law. Part II analyzes the role and constitutionality of state law in bankruptcy remedies. It notes that states may create causes of action as corporate property, which can mirror the effects of substantive consolidation. Part II asserts that this does not violate the Bankruptcy Clause of the Constitution because the Supreme Court’s bankruptcy jurisprudence respects state characterizations of property. Part III sketches a range of possible implementations of state law actions for substantive consolidation. The Note argues these causes of action would yield greater deference to state policy decisions regarding corporate structure, give sophisticated debtors and creditors more flexibility in structuring their relationships, and promote more efficient bankruptcy through increased use of substantive consolidation.
News & Events
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Volume 97 Lead Piece Profiled in New York Times
The Volume 97 Lead Piece, a study of how the Supreme Court treats business interests by distinguished legal scholars Lee Epstein, William M. Landes, and Richard A. Posner, was profiled in the May 5, 2013 edition of the New York Times. The story, titled Corporations Find a Friend in the Supreme Court, [...]
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Volume 98 Spring Submissions Closed
The Minnesota Law Review has closed the spring submissions period for Volume 98. Submissions for Volume 98 will reopen on Thursday, August 1. Please see the submissions page for more details.
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Volume 98 Submissions Will Open Feb. 15
The Minnesota Law Review will begin accepting submissions for Volume 98 on Friday, February 15, 2013. Please see this page for more details.
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Minnesota Law Review Announces Volume 98 Editorial Board
The Minnesota Law Review is pleased to announce its Volume 98 editorial board, headed by Editor in Chief Jake Vandelist.
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Minnesota Law Review Announces 2013 Symposium Topic
The Minnesota Law Review is pleased to announce that its 2013 symposium will address the legal and political issues facing organized labor in the United States. The symposium will be held at the University of Minnesota Law School on October 25, 2013.
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