David A. Skeel

Recharacterization and the Nonhindrance of Creditors

Using a 1977 article by Robert Clark as its starting point, this article attempts to shed new light on the question of whether and when shareholder loans to her company should be either equitably subordinated or, as courts have done in a few recent cases, recharacterized as equity. In its emphasis on the particular issue of shareholder loans, the article has a narrower compass than Clark’s article, which uses a four-part typology to explore the relationship among fraudulent conveyance law, equitable subordination, veil piercing, and dividend restrictions. But the article also expands Clark’s analysis in several respects. The most important adjustment involves the general Nonhindrance ideal, which we use to identify a crucially important form of interference with the rights of creditors that Clark does not himself consider directly.Part 2 of the article very briefly describes the 1939 Supreme Court case that served as a well-spring for equitable subordination doctrine in general, and for subordination of shareholder loans in particular. Part 3 then focuses on a series of recent decisions that have wrestled with the question whether shareholder loans should be recharacterized as equity contributions. Recharacterization doctrine is closely related to equitable subordination, but most courts view it as a separate development. Part 3 suggests that much of the confusion in the cases could be eliminated by disentangling two issues, whether the status of a loan is ambiguous (which raises issues of Truth, in terms of Clark’s typology) and whether it was likely to destroy value that would otherwise go to creditors (the Nonhindrance concern); and by distinguishing bankruptcy recharacterization from the tax characterization cases that seem to have spawned the new doctrine. Part 4 then concludes by briefly considering the German and Austrian approaches to these same issues, which focus on capitalization and creditworthiness.The most important, and initially counterintuitive, implication comes in Part 3: whereas US courts have treated security interests as a badge of legitimacy in assessing shareholder loans, secured loans are actually the most worrisome form of shareholder investment. These security interests, we argue, should be disallowed.

Time to Rethink Sovereign Bankruptcy: A New Role for the IMF?

This chapter is concerned with the issue of how to balance bailouts (or ‘lending into arrears’) with debt reductions (or ‘private sector involvement’) in the resolution of sovereign debt crises. It begins by briefly outlining the core underlying economic and legal problems sovereigns and creditors face in a sovereign debt crisis. It continues with a review of recent proposals to facilitate or regulate sovereign debt renegotiations, in particular the proposal for a statutory approach to sovereign debt restructuring. We do not aim to assess the political feasibility of the proposed institutions for the resolution of sovereign debt crises. Instead, we focus on their likely effectiveness. In addition to defending a sovereign bankruptcy framework we have developed in recent work, we propose a major reorientation of the IMF’s role in sovereign debt crises. The motivation for the discussion can be traced back to the Mexican debt crisis of 1994–5, which gave rise to an International Monetary Fund (IMF) bailout of unprecedented size. Since then, there has been a debate raging on how the IMF should handle sovereign debt crises. Despite the successful resolution of the crisis and the quick repayment by Mexico of all the emergency debt, the sheer size of the intervention raised worries that bailouts could cause significant sovereign debt market distortions. These concerns have led to a gradual shift away from the assumption that the IMF can and should act as the de facto international lender of last resort (ILOLR) by arranging bailouts in response to major sovereign debt crises. As is now widely recognized, the

The Empty Legacy of the Corporate Scandals

Only a few times in the nations history have corporate scandals equaled or exceeded the abuses uncovered over the past few years. But arguably never has so little been done to correct them. This law professor lists the reforms that President Bush might have proposed to make corporate America more honest and better managed and to make investing safer.

Vern Countryman and the Path of Progressive (and Populist) Bankruptcy Scholarship

Throughout the 1960s and 1970s, Vern Countryman was the leading progressive bankruptcy scholar- and in fact the leading bankruptcy scholar of any perspective. This article explores the links between Countrymans work and that of his New Deal predecessors, on the one hand, and his successors, on the other. In addition to Countryman himself, the article focuses on William Douglas, who was Countrymans predecessor and mentor, as well as being the leading bankruptcy scholar of the New Deal. Among Countrymans successors, the article focuses on the work of Elizabeth Warren, Countrymans successor at Harvard Law School and the nations leading current progressive scholar. The article considers both the continuities and some surprising disjunctions in the evolution of progressive bankruptcy scholarship. Countryman differed from William Douglas, who as chairman of the Securities and Exchange Commission had spearheaded a dramatic overhaul of the nations corporate reorganization laws, in three crucial respects. Whereas Douglas was best known for his contributions to corporate bankruptcy, Countryman focused much of his energy on the financial distress of individuals. Countryman also forged much closer ties to the bankruptcy bar, and he was much less sympathetic to instrumental perspectives, as evidenced by his hostility to the emerging law and economics movement. Each of these attributes plays a similarly prominent role in the work of Elizabeth Warren and other current progressives. The article shows that the shifts in progressive thinking can be traced in large part to economic forces such as changes in the credit markets. The analysis also suggests ways in which current progressives could revitalize the kinds of arguments made by their predecessors.

The political heart of criminal procedure : essays on themes of William J. Stuntz

Part I. The Political Economy of Substantive Criminal Law: 1. Political dysfunction and the machinery of capital punishment Joe Hoffmann 2. Bill Stuntz and the principal-agent problem in American criminal law Richard McAdams 3. Overcriminalization for lack of better options Daniel Richman 4. Stealing Bill Stuntz David Sklansky Part II. Police Investigation: 5. What the police do Anne Coughlin 6. The distribution of dignity and the fourth amendment Tracey Meares 7. Why courts should not quantify probable cause Orin Kerr 8. DNA and the fifth amendment Erin Murphy Part III. Emotion, Discretion, and the Judicial Role: 9. Two conceptions of emotion in criminal law: an essay inspired by Bill Stuntz Dan Kahan 10. Patrolling the fence line: how the court only sometimes cares about preserving its role in criminal cases Andrew Leipold 11. Three puzzles in the work of Bill Stuntz Michael Seidman 12. The mercy seat: discretion, justice, and mercy in the American criminal justice system Carol Steiker 13. Three underrated explanations for the punitive turn Bill Stuntz.

Behaviorism in Finance and Securities Law

In this Article, I take stock (as something of an outsider) of the behavioral economics movement, focusing in particular on its interaction with traditional cost-benefit analysis and its implications for agency structure. The usual strategy for such a project--a strategy that has been used by others with behavioral economics--is to marshal the existing evidence and critically assess its significance. My approach here is somewhat different. Although I describe behavioral economics and summarize the strongest criticisms of its use, the heart of the Article is inductive, and focuses on a particular context: financial and securities regulation, as recently revamped by the Dodd-Frank Act and subsequent rule making. To lay the foundation, I begin by briefly describing behavioral economics and by surveying the most significant critiques of its use. I then consider how behavioral economics has informed, or might inform, the work of the Consumer Financial Protection Bureau, SEC rule making on proxy access, and the efforts of the new financial legislation to ban bailouts. I suggest, among other things, that behavioralisms implications are quite different for rules and rule making than for questions of regulatory structure.

Introduction: Appreciating Bill Stuntz

The past several decades have seen a renaissance in criminal procedure as a cutting edge discipline, and as one inseparably linked to substantive criminal law. The renaissance can be traced in no small part to the work of a single scholar: William Stuntz. This essay is the introductory chapter to The Political Heart of Criminal Procedure: Essays on Themes of William J. Stuntz (forthcoming, Cambridge University Press, 2012), which brings together twelve leading American criminal justice scholars whose own writings have been profoundly influenced by Stuntz and his work. After briefly chronicling the arc of Stuntz’s career, the essay provides a detailed overview of his criminal justice scholarship, from his first major articles and his classic work on the political economy of criminal law to The Collapse of American Criminal Justice, the magisterial, posthumous book that brings together many of the themes that preoccupied his scholarly life. The essay also surveys Stuntz’s writings on Christianity and about his physical pain and the cancer that ultimately killed him. The essay concludes by describing each of the book’s chapters, including a brief epilogue by Stuntz himself.

The Political Heart of Criminal Procedure: Frontmatter

Part I. The Political Economy of Substantive Criminal Law: 1. Political dysfunction and the machinery of capital punishment Joe Hoffmann 2. Bill Stuntz and the principal-agent problem in American criminal law Richard McAdams 3. Overcriminalization for lack of better options Daniel Richman 4. Stealing Bill Stuntz David Sklansky Part II. Police Investigation: 5. What the police do Anne Coughlin 6. The distribution of dignity and the fourth amendment Tracey Meares 7. Why courts should not quantify probable cause Orin Kerr 8. DNA and the fifth amendment Erin Murphy Part III. Emotion, Discretion, and the Judicial Role: 9. Two conceptions of emotion in criminal law: an essay inspired by Bill Stuntz Dan Kahan 10. Patrolling the fence line: how the court only sometimes cares about preserving its role in criminal cases Andrew Leipold 11. Three puzzles in the work of Bill Stuntz Michael Seidman 12. The mercy seat: discretion, justice, and mercy in the American criminal justice system Carol Steiker 13. Three underrated explanations for the punitive turn Bill Stuntz.

The Political Heart of Criminal Procedure: Emotion, Discretion, and the Judicial Role

Part I. The Political Economy of Substantive Criminal Law: 1. Political dysfunction and the machinery of capital punishment Joe Hoffmann 2. Bill Stuntz and the principal-agent problem in American criminal law Richard McAdams 3. Overcriminalization for lack of better options Daniel Richman 4. Stealing Bill Stuntz David Sklansky Part II. Police Investigation: 5. What the police do Anne Coughlin 6. The distribution of dignity and the fourth amendment Tracey Meares 7. Why courts should not quantify probable cause Orin Kerr 8. DNA and the fifth amendment Erin Murphy Part III. Emotion, Discretion, and the Judicial Role: 9. Two conceptions of emotion in criminal law: an essay inspired by Bill Stuntz Dan Kahan 10. Patrolling the fence line: how the court only sometimes cares about preserving its role in criminal cases Andrew Leipold 11. Three puzzles in the work of Bill Stuntz Michael Seidman 12. The mercy seat: discretion, justice, and mercy in the American criminal justice system Carol Steiker 13. Three underrated explanations for the punitive turn Bill Stuntz.

The Political Heart of Criminal Procedure: Contributor List

Part I. The Political Economy of Substantive Criminal Law: 1. Political dysfunction and the machinery of capital punishment Joe Hoffmann 2. Bill Stuntz and the principal-agent problem in American criminal law Richard McAdams 3. Overcriminalization for lack of better options Daniel Richman 4. Stealing Bill Stuntz David Sklansky Part II. Police Investigation: 5. What the police do Anne Coughlin 6. The distribution of dignity and the fourth amendment Tracey Meares 7. Why courts should not quantify probable cause Orin Kerr 8. DNA and the fifth amendment Erin Murphy Part III. Emotion, Discretion, and the Judicial Role: 9. Two conceptions of emotion in criminal law: an essay inspired by Bill Stuntz Dan Kahan 10. Patrolling the fence line: how the court only sometimes cares about preserving its role in criminal cases Andrew Leipold 11. Three puzzles in the work of Bill Stuntz Michael Seidman 12. The mercy seat: discretion, justice, and mercy in the American criminal justice system Carol Steiker 13. Three underrated explanations for the punitive turn Bill Stuntz.