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Bankruptcy System Backlash

July 21, 2022

Prof. David A. Skeel discusses the recent backlash against the bankruptcy system — including against judge shopping, the Texas Two-Step and third-party releases — and what can be done.

David A. Skeel, S. Samuel Arsht Professor of Corporate Law at the University of Pennsylvania Carey Law School, recently spoke with The Deal.

From The Deal:

Professor David Skeel of the University of Pennsylvania Carey Law School discussed the current backlash against the bankruptcy system, and whether new regulations are needed, on the latest episode of Fresh Start.

“Bankruptcy seems to be having an identity crisis right now,” Skeel said. Amid an unusually long string of really controversial filings, Skeel said that the public has “begun to suspect that it’s a rigged game.”

Skeel primarily tackled three areas where the Chapter 11 system could be ripe for reform: judge shopping, the so-called Texas Two-Step and nonconsensual third-party releases.

Skeel said he believes the tools provided by the bankruptcy system are enough for judges to handle potential abuses in the first two areas, without new regulation. Third-party releases, however, are an area Skeel said he believes could be reformed.

Skeel is the author of True Paradox: How Christianity Makes Sense of Our Complex World (InterVarsity, 2014); The New Financial Deal: Understanding the Dodd-Frank Act and Its (Unintended) Consequences (Wiley, 2011); Icarus in the Boardroom (Oxford, 2005); Debt’s Dominion: A History of Bankruptcy Law in America (Princeton, 2001); and numerous articles on bankruptcy, corporate law, financial regulation, Christianity and law, and other topics.

He has also written commentaries for the New York Times, Wall Street Journal, Books & Culture, The Weekly Standard, and other publications. He has received the Harvey Levin award three times for outstanding teaching, as selected by a vote of the graduating class, the Robert A. Gorman award for excellence in upper-level course teaching, and the University’s Lindback Award for distinguished teaching.

Listen to Skeel’s interview at The Deal.