News about the Business Law Program or news about faculty or students that relates to business law
In an August 28th letter to the editor of The Washington Post, bankruptcy expert and professor Ralph Brubaker strongly condemned the Purdue Pharma settlement plan. He wrote:
“There are eminently feasible, well-trodden means of rendering justice for massive iniquity, which can and will produce much better (and actual) settlements for victims, if the Supreme Court repudiates the kind of ad hoc, designer justice system for the wealthy of which the Purdue deal is emblematic.”
The proposed bankruptcy plan for Purdue Pharma, which would allocate billions of dollars to help ease the nation’s opioid crisis but shield the Sackler family from future lawsuits, has been placed on hold by the Supreme Court. Speaking to The Washington Post, Professor Ralph Brubaker, an expert in bankruptcy law, called the case one of the most important bankruptcy cases to ever come before the Court “from both a practical and a fundamental-justice perspective.” Appellate courts have long been divided on whether those who haven’t declared bankruptcy, such as the individuals in the Sackler family, can be “released” from potential lawsuits through a bankruptcy reorganization, setting up a potentially precedent-setting opinion from the Supreme Court.
In his decision this week, Judge Philip Bentley of the U.S. Bankruptcy Court in Manhattan ruled a bankrupt Holiday Inn in downtown Manhattan can’t use chapter 11 to maintain its low-rate mortgage without paying penalty interest linked to its default. The case arose after the owner failed to make payments on its loan after the hotel closed during the pandemic; lenders began charging default interest in response, leading the owner to file for bankruptcy in order to avoid a seizure. The decision cited two articles by Professor Ralph Brubaker from Bankruptcy Law Letter: “Default Rates of Interest and Cure of a Defaulted Debt in a Chapter 11 Plan of Reorganization (Part I): Entz-White’s Overlooked Choice of Law Dimension” (December 2016, Vol. 36, Issue 12) and “Default Rates of Interest and Cure of a Defaulted Debt in a Chapter 11 Plan of Reorganization (Part II): Entz-White and the ‘Penalty Rate’ Amendments” (January 2017, Vol. 37, Issue 1). Writing about the decision, the Wall Street Journal quoted Brubaker, who explained that this ruling could increase the costs for companies that were hoping to reinstate their cheap debt.