Monday, May 25, 2020

Some Changes Needed to Bankruptcy Laws/Courts

Something occurred to me when reading about the Hertz car company failure.

We need to allow/require judges to negate any asset sales to foreign companies (perhaps multinational, as well). Has to be an American company. Otherwise, China and other countries will own us.

Could that change be a DOJ rule change? Or, other administrative, rather than legal, change? I don't know.

Any lawyers reading this? Please comment.


Tracy Coyle said...

I am not an attorney. However, I have been working with them and preparing their court documents in the Federal Bankruptcy Court for more than 20 years. I was an opponent of the 2005 Bankruptcy Reform Act and had multiple conversations with Elizabeth Warren (telling her 'that her data was wrong' and she should stop promoting it even while agreeing it needed to be blocked).

I have prepared more than 2500 petitions.

Here is the issue: the Trustee in a bankruptcy is required to maximize the value of assets being sold - and therefore would likely run afoul of attempts to limit it to only US companies DEPENDING on the market for those assets.

YES, Congress could make the change, but I doubt you could get it passed the Republicans - who led the charge for BARF (our name for the Reform Act). It could not be a rule change.

Linda Fox said...

Well, Obama got some not-legal acts in motor industries through the bankruptcy courts, even though it violated red-letter law. This would just mean that assets would not be permitted to go out of control of US interests, which, as the US government is expected to gain from taxing the profits, might be considered having an interest in the outcome. The up-front money that foreign countries put up (and, much of the cash comes from their government) doesn't outweigh the cost of the assets leaving our countries.

Put pressure on American investors to put up some money. Maybe de-listing the stock of companies leaving the US, enforcing import rules that disfavor them, or putting a surtax on their products would make it feasible to turn down foreign offers. I'm afraid I'm not as concerned about the principles of legality, as I am in outcome. Foreign interests should not have an advantage.

It wouldn't be the first time that the government put their thumb on the scales.