CBLP Seminar: Collapsing the Bankrupt Corporate Group

A CBLP seminar on Collapsing the Bankrupt Corporate Group by Professor Richard Squire, and in discussion with Professor Sarah Paterson.


When should bankruptcy courts disregard the boundaries among the myriad legal entities comprising the typical bankrupt corporate group, and instead calculate creditor recoveries based on the combined assets and liabilities of the enterprise as a whole? U.S. bankruptcy judges like to substantively consolidate groups in order to save on accounting and litigation costs and streamline proceedings. But appellate courts, concerned about creditor expectations, hold that substantive consolidation should be done “sparingly.” We argue that a court should respect the corporate boundaries within a bankrupt group only when they have served to reduce creditor information costs by cleanly partitioning creditor claims. This occurs only when the group has maintained accurate subsidiary-specific accounts and refrained from issuing intragroup guarantees that puncture internal partitions. Otherwise, the court can be confident that the group has divided itself into multiple corporate entities only to achieve regulatory and tax advantages, which substantive consolidation does not undermine.

Speaker Bios: 

Professor Richard Squire is Alpin J. Cameron Chair in Law at Fordham University School of Law. Professor Squire has been a member of the Fordham faculty since 2006. He publishes primarily on the subjects of corporate law and corporate bankruptcy, and he has also written articles on antitrust and securities regulation. He has twice been elected Fordham Law School's Teacher of the Year, in 2010 and 2011. He previously taught at Harvard College, where he won the Allyn Young Award for excellence in teaching principles of economics. From 2001 to 2002 he clerked for Judge Robert D. Sack on the U.S. Court of Appeals for the Second Circuit, and between 2002 and 2005 he was an associate with Wachtell, Lipton, Rosen & Katz in New York City. Professor Squire held visiting professor positions at Duke Law School (2018), Columbia Law School (2013), and Yale Law School (2012-2013). Professor Squire will be the Liberty Fellow at the University of Leeds School of Law during May 2023.

Sarah Paterson is a professor of law at LSE Law School. Her main areas of research are corporate reorganization and insolvency. Before joining LSE she was a partner in Slaughter and May in London, with whom she retains a consultancy. Professor Patterson is the author of Corporate Reorganization Law and Forces of Change (Oxford University Press, 2020) and Debt restructuring (Oxford University Press, 2022, 3rd ed., with Rodrigo Olivares-Caminal, Alan Kornberg, Alan Kornberg, Dalvinder Singh, and Eric McLaughlin).

Date & Time: 

Tuesday, 9th May, 16:00 - 17:30


Room G.32 Liberty Building, School of Law, University of Leeds, Leeds, LS2 9JT


All are welcome. This is a free event, though registration is required via Eventbrite.