Volume 78, Issue 3 (more) Corporate reorganization under Chapter 11 of the Bankruptcy Code is built on the foundation of the absolute priority rule, which requires that senior credtiors be paid in full before any value can be distributed to junior creditors. The standard law and economics undersstadning is that absolute priority follows inevitably from the "creditors' bargain" model. That model tells us that the optimal system of reorganization must respect nonbankruptcy contract rights while maximizing the expected value of assets in bankruptcy. The conventional wisdom is that absolute priority fits this bill as the singular way of protecting creditors' nonbankruptcy contract rights. But what if this conventional wisdom is incorrect? A closer look at the structure of corporate debt suggests that it is. Junior creditors issue debt supported by the residual value of the debtor firm. The repayment of that debt is contingent on the future value of the firm: the junior creditors receive any future value that exceeds the face value of the senior debt. It is well recognized that this right is the equivalent of a call option on the firm's assets. And yet Chapter 11 destroys the value of that call option by collapsing all future possibilities to present-day value. Thus, absolute priority eliminates the nonbankruptcy contract rights of junior creditors and creates new rights in going-concern value for senior creditors. This Article examines the potential of an alternative priority mechanism that protects both the junior creditors' call-option value and the senior creditors' nonbankruptcy contract rights. This mechanism--which I call Option-Preservation Priority--is shown to protect the nonbankruptcy contract rights of all creditors and maximize the expected value of assets in bankruptcy.
Volume 78, Issue 2 (more) Courts and scholars have struggled to identify the original meaning of the Alien Tort Statute (ATS). In the 1980s, lower federal courts began reading the statute expansively to allow foreign citizens to sue other foreign citizens for all violations of modern customary international law that occurred outside the United States. In 2004, the Supreme Court took a more restrictive approach. Seeking to implement the views of the First Congress, the Court determined that Congress wished to grant federal courts jurisdiction only over a narrow category of alien claims “corresponding to Blackstone’s three primary [criminal] offenses [against the law of nations]: violation of safe conducts, infringement of the rights of ambassadors, and piracy.” In this Article, we argue that neither the broader approach initially endorsed by lower federal courts nor the more restrictive approach subsequently adopted by the Supreme Court fully captures the original meaning and purpose of the ATS. In 1789, the United States was a weak nation seeking to avoid conflict with other nations. Every nation had a duty to redress certain violations of the law of nations committed by its citizens or subjects against other nations or their citizens. If a nation failed to redress such violations, then it became responsible and gave the other nation just cause for war. In the aftermath of the Revolutionary War, the First Congress enacted the ATS as one of several civil and criminal provisions designed to redress law of nations violations committed by United States citizens. The ATS authorized federal court jurisdiction over claims by foreign citizens against United States citizens for intentional torts to person or personal property. At the time, both the commission of—and the failure to redress—such “torts” violated “the law of nations.” The statute thus employed these terms to create a self-executing means for the United States to avoid military reprisals for the misconduct of its citizens. Neither the ATS nor Article III, however, authorized federal court jurisdiction over tort claims between aliens. Despite suggestions that the true import of the ATS may never be recovered, the original meaning of the statute appears relatively clear in historical context: the ATS limited federal court jurisdiction to suits by aliens against United States citizens but broadly encompassed any intentional tort to an alien’s person or personal property.
Volume 78, Issue 1 (more) Symposium: the licensing of intellectual property On June 19 and 20, 2010, the John M. Olin Center for Law and Economics at The University of Chicago and The University of Chicago Law Review hosted a conference, The Licensing of Intellectual Property. The flavors of the collected contributions in the resulting Symposium journal issue can be captured through a common metaphor. Consider the copy (hard or digital) of the symposium Issue you are presently reading. Someone else owns the copyright to it, but through a chain of transactions—mostly if not solely licenses—you are now enjoying this content. Your rights in the copy are limited by these licenses, but do you know the exact scope of such limitations? 78 U Chi L Rev 1 [View Symposium Articles]
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Peer Review The Law Review has recently made a provisional decision to join a number of our peer journals in incorporating faculty peer review into our article selection process. We have invited a diverse group of faculty members to comment on the merit and originality of select articles in their scholarly discipline. The Articles Group will use these comments to supplement our discussion of articles under consideration for publication. We hope that, as we choose articles from a pool of scholarship that is growing increasingly specialized and interdisciplinary, this new initiative will ensure that the Law Review continues to publish the caliber of legal scholarship for which we are known. We further hope that the opportunity for scholars to comment on the work of their peers will spark debate and collaboration among the scholarly community. Although peer reviewers will have the option of remaining anonymous, we hope that the best reviews will ultimately result in response pieces to be published on our website or in the Law Review. Our ultimate goal in this initiative is to ensure that we retain independence in our decision-making while our journal continues to provide the valuable service to the scholarly community that it has aspired to provide over the years. Exploding Offers On April 19, 2011, the University of Chicago Law Review and several peer journals released a joint letter committing to give every author at least seven days to decide whether to accept any offer of publication. Eliminating "exploding offers" will improve the quality of our deliberations and the scholarship that we publish, and we invite all other student-edited law journals to join this letter. |
