For several years, bankruptcy and corporate governance scholars have discussed “control rights” in bankruptcy cases and have debated how those rights should be allocated. Data indicate that, as a positive matter, creditors effectively have the ability to decide the fate of an insolvent firm. The scholarship does not, however, adequately address which ethical duties should be imposed on the people who exercise those control rights. This Article fills that void by documenting the increased presence and influence of creditor-controlled managers who have the powers, but not the ethical duties, of public trustees. The Article argues that a firm’s principal creditors or investors should not be allowed to shift control of the firm to managers hired at their request unless those privatized trustees are forced to comply with the same ethical obligations that the Bankruptcy Code and applicable state laws impose on the public trustees of insolvent firms.
Volume 93 - No. 3
- Note: Providing Clarity for Standard of Conduct for Directors Within Benefit Corporations: Requiring Priority of a Specific Public Benefit
- Note: Economic Protectionism and Occupational Licensing Reform
- The Luxembourg Effect: Patent Boxes and the Limits of International Cooperation
- The Geography of Equal Protection
- What Legal Authority Does the Fed Need During a Financial Crisis?
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