- Collection:
- Scholarly Works
- Title:
- Bankruptcy Grifters
- Creator:
- Simon, Lindsey
- Date of Original:
- 2022-01-01
- Subject:
- University of Georgia. School of Law
Law--Study and teaching
University of Georgia--Faculty - Location:
- United States, Georgia, Clarke County, Athens, 33.96095, -83.37794
- Medium:
- articles
- Type:
- Text
- Format:
- application/pdf
- Description:
- Previously published on SSRN. (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3817530)
Grifters take advantage of situations, latching on to others for benefits they do not deserve. Bankruptcy has many desirable benefits, especially for mass-tort defendants. Bankruptcy provides a centralized proceeding for resolving claims and a forum of last resort for many companies to aggregate and resolve mass-tort liability. For the debtor-defendant, this makes sense. A bankruptcy court’s tremendous power represents a well-considered balance between debtors who have a limited amount of money and many claimants seeking payment. But courts have also allowed the Bankruptcy Code’s mechanisms to be used by solvent, nondebtor companies and individuals facing mass-litigation exposure. These “bankruptcy grifters” act as parasites, receiving many of the substantive and procedural benefits of a host bankruptcy, but incurring only a fraction of the associated burdens. In exchange for the protections of bankruptcy, a debtor incurs the reputational cost and substantial scrutiny mandated by the bankruptcy process. Bankruptcy grifters do not. This dynamic has become evident in a number of recent, high-profile bankruptcies filed in the wake of pending mass-tort litigation, such as the Purdue Pharma and USA Gymnastics cases. This Article is the first to call attention to the growing prevalence of bankruptcy grifters in mass-tort cases. By charting the progression of nondebtor relief from asbestos and product-liability bankruptcies to cases arising out of the opioid epidemic and sex-abuse scandals, this Article explains how courts allowed piecemeal expansion to fundamentally change the scope of bankruptcy protections. This Article proposes specific procedural and substantive safeguards that would deter bankruptcy-grifter opportunism and increase transparency, thereby protecting victims as well as the bankruptcy process.
bankruptcy -- mass torts -- Chapter 11 -- channeling injunction -- third-party release -- non-debtor release -- Section 524(g) -- asbestos bankruptcy -- aggregate litigation -- multidistrict litigation -- civil procedure -- opioid crisis -- sex abuse litigation -- Purdue Pharma -- USA Gymnastics -- Boy Scouts of America -- Bankruptcy Law -- Torts - External Identifiers:
- Metadata URL:
- https://digitalcommons.law.uga.edu/fac_artchop/1420
- Holding Institution:
- Alexander Campbell King Law Library
- Rights:
-
