The New Face of Bankruptcy Law

Collapse & Recovery:

The New Face of Bankruptcy Law
What do bankruptcy lawyers really do?

That question—not often addressed in a typical course on the bankruptcy code—is considered from numerous angles in the Bankruptcy Law seminar developed and taught by Professor Edward Morrison, an attorney and economist.

"To understand bankruptcy law, you can't just read books and statutes. There are nuances of the practice that you can understand only by talking to the people who do it," says Dean David M. Schizer. "This course exposes students to precious expertise that is uniquely available because of our location and our access to an extraordinarily distinguished group of alumni."

Indeed, as Prof. Morrison cheerfully admits, he launched the seminar Collapse & Recovery: The New Face of Bankruptcy Law in part so that he could learn more from the pros. Having taught a basic course in bankruptcy, he was engaged in research that was leading him to new discoveries about small-business corporate reorganizations. That prompted him to take a closer look at the restructuring of very large businesses. Talking with Harvey Miller '59, one of the nation's leading bankruptcy practitioners who also teaches at the Law School, he began to learn more about issues ranging from asset securitization to claims trading, which are rarely addressed in any meaningful detail in a bankruptcy class.

Professor Morrison joined the faculty in 2003. He was drawn to the classroom partly through the influence of the U.S. Supreme Court Justice Antonin Scalia, who asked him: "Think of the shelf life of a typical [law review] article -- three years? Five years if you're lucky? Compare that with the effect on students through teaching.
Photo credit: Dustin Ross

"Take an example like K-Mart," says Prof. Morrison. "When it went into bankruptcy, creditors sold their claims to various distressed-debt hedge funds (also known as ‘vulture funds'), which gained significant control over the company's operations. How does the reorganization process change when hedge funds aggregate the claims of smaller creditors and thereby gain significant control over the reorganization process? Similarly, how does the process change when a firm obtains financing by agreeing to loan covenants with heavy restrictions on the company's actions? There has been a major shift in creditor control over the reorganization process. This shift and other issues that are important to bankruptcy lawyers rarely end up in reported cases and are therefore given little or no attention in casebooks."

The course revolves around approximately six cutting-edge topics over 12 weeks. For each topic, Prof. Morrison invites a leading practitioner to speak to the class. Past speakers have included Mr. Miller (formerly of the firm Weil, Gotshal & Manges and now with Greenhill, the independent investment banking firm); Stephen H. Case '68, a partner with Davis Polk & Wardwell; Donald S. Bernstein, also a partner with Davis Polk; and Harold S. Novikoff '75, a partner at Wachtell, Lipton, Rosen & Katz.

The course includes a mixture of J.D., LL.M., and M.B.A. students, who are asked to research and analyze each topic in the week prior to the guest speaker's presentation and to bring valuable material on each topic to class. In fact, students are typically so well prepared that the guest speaker does not present but rather participates in an exciting and energizing roundtable.