This Essay argues that bankruptcy proceedings are well-suited to resolving mass tort claims. Mass tort cases create a collective action problem that encourages claimants who are worried about available recoveries to race to the courthouse to collect ahead of others. This race can destroy going concern value and lead to the dismemberment of valuable firms. Coordination among claimants is difficult as each one seeks to maximize its own recoveries. These are the very collective action and holdout problems that bankruptcy proceedings are designed to solve. As such, bankruptcy proceedings are appropriate means of resolving mass torts as long as they leave tort victims no worse off than they would have otherwise been.
Anthony J. Casey
We wish to thank Ken Ayotte, Vince Buccola, Douglas Baird, Jared Ellias, Saul Levmore, Alan Schwartz, and David Skeel for helpful comments. We also thank Julian Gale, Silvia Moreno, and Leonor Suarez for excellent research assistance. The Richard Weil Faculty Research Fund and the Paul H. Leffmann Fund provided generous support.
On June 11, 2020, the Hertz Corporation introduced a new strategy for bankruptcy financing.
I am grateful for research support from the Richard Weil Faculty Research Fund and the Paul H. Leffman Fund. Stephanie Xiao and Courtney Block provided excellent research assistance.
Personalized law is an old concept. The idea that the law should be tailored to better fit the relevant context to which it applies is obvious and has been around as long as the idea of law itself.
I thank Daniel Abebe, Barry E. Adler, Kenneth Ayotte, Adam B. Badawi, Douglas G. Baird, Omri Ben-Shahar, Erin M. Casey, Stephen Choi, Lee Anne Fennell, Joseph A. Grundfest, M. Todd Henderson, William Hubbard, Mitchell Kane, Ashley Keller, Randall L. Klein, Saul Levmore, Douglas Lichtman, Anup Malani, Troy McKenzie, Jon D. Michaels, Anthony Niblett, Randal C. Picker, Eric Posner, Robert K. Rasmussen, Andres Sawicki, Naomi Schoenbaum, Julia Simon-Kerr, Richard Squire, Lior Strahilevitz, Matthew Tokson, George G. Triantis, Noah Zatz, participants at the Annual Meeting of the American Law and Economics Association, participants at the Annual Meeting of the Midwestern Law and Economics Association, participants at the University of Chicago Law School Faculty Works-in-Progress Workshop, participants at the University of Southern California Center in Law, Economics, and Organization Workshop, and the faculties of Columbia Law School, Cornell Law School, Emory Law School, Marquette University Law School, Stanford Law School, the University of Alabama School of Law, University of California Irvine School of Law, the University of Chicago Law School, University of Colorado Law School, University of Georgia Law School, the University of Minnesota Law School, and Vanderbilt University Law School for helpful comments and discussion.
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