Disaggregating State Bankruptcy

States today face fiscal challenges that they cannot surmount. With trillions in debt and billions in deficits, states are rapidly reaching the point where they cannot satisfy their obligations to pensioners, employees, and residents. This deterioration of state finances has, in turn, revived the debate over whether Congress should expand the Bankruptcy Code to allow states to file for bankruptcy. The debate, though, overlooks how, as a practical matter, bankruptcy is already available to financially distressed states. Chapter 9 of the Bankruptcy Code permits a state’s political subdivisions, public agencies, and instrumentalities to file for bankruptcy if the state authorizes them to do so. A state can therefore make its own debt bankruptcy-eligible by having a government entity—other than the state itself—owe the debt, and by authorizing all government entities in the state to file for bankruptcy. This disaggregation—states operating, and taking on debt, through government entities rather than the state itself—is already the norm. In fact, the vast majority of so-called “state debt,” some ninety percent, is owed not by states themselves, but by government entities eligible to file for bankruptcy. The interaction of disaggregated states and Chapter 9 leads to a doctrinal oddity: Debt owed by the state itself is not bankruptcy-eligible, but that same debt, if owed by a state agency or instrumentality, is bankruptcy-eligible. That doctrinal oddity has enormous significance, both theoretical and practical. For theory, disaggregation shows that states can partition liability, confining distress to a particular entity instead of having that entity’s liabilities threaten the fiscal stability of the whole state. As for practice, disaggregation offers a superior alternative to adding a state bankruptcy chapter to the Code. Disaggregation is simpler, fairer, and has fewer spillover effects, offering states a good way to address their current, dire, fiscal situations

Texas Two-Stepping Out of Bankruptcy

Johnson & Johnson has a problem. For decades, it sold talc baby powder, a product that made Johnson & Johnson a household name and earned the business billions. But as those babies grew up, they started getting cancer. And then they began suing. Last June, twenty-two plaintiffs cemented a $2.12 billion judgment against Johnson & Johnson for cancer caused by its baby powder. Another 38,000 cases (and counting) remain in progress, each with the potential for a similar verdict. To handle these mass tort liabilities, Johnson & Johnson has followed the lead of many businesses and turned to the bankruptcy courts. But it has done so with a twist. Unlike the businesses that pioneered using bankruptcy for mass torts, Johnson & Johnson is not filing for bankruptcy. Instead, it is dividing itself using an obscure Texas law, moving its assets into one business and its talc liabilities into another, and having the liability-laden business file for bankruptcy. This maneuver, known as the “Texas Two-Step,” threatens the tort recovery of tens of thousands of talc claimants. The Texas Two-Step is the latest addition to a panoply of aggressive techniques debtors have developed to gain the upper hand against creditors. Other scholars, for example, have identified the use of coercive restructuring support agreements and “deathtraps,” third-party releases, and less-than-impartial bankruptcy directors to disadvantage creditors. The use of such techniques has been widely criticized as “bankruptcy hardball,” “the breakdown of chapter 11,” or simply “lawlessness.” It is now time to add the two-step to that catalog and to consider how that aggressive tactic might be counteracted. The balance of this Essay does just that. Part I begins with an explanation of mass torts in bankruptcy and how the Texas Two-Step offers debtors something new. Part II then discusses fraudulent transfer law, the main avenue commentators have considered for tort claimants responding to the Texas Two-Step, and the shortcomings of that avenue. Next, in Part III, this Essay suggests a role for good faith challenges, which tort claimants may bring at the beginning of a bankruptcy and may have resolved far more quickly, enabling claimants to counteract the efficacy of the Texas Two-Step. Finally, the Essay concludes with some reflections on what the two-step means for the longstanding debate on bankruptcy forum shopping and on what the two-step adds to more recent discussions of the ongoing role of common law in bankruptcy’s statutory system

Digital Realty, Legislative History, and Textualism After Scalia

There is a shift afoot in textualism. The New Textualism of Justice Scalia is evolving in response to a new wave of criticism. That criticism presses on the tension between Justice Scalia’s commitment to faithful agency (effecting the legislature’s will) and his rejection of legislative history in the name of ordinary meaning (which ignores legislative will). And it has caused some textualists to shift away from faithful agency, even to the point of abandoning it as textualism’s grounding principle. But this shift has gone unnoticed. It has yet to be identified or described, let alone defended, even as academic and judicial textualists continue to drift away from New Textualism to a newer textualism. Digital Realty v. Somers brought this newer textualism to the fore in a pair of concurrences that dueled over legislative history. The duel reopened the debate long silenced during Justice Scalia’s tenure. And it suggested two shifts. First, Justice Alito joined the textualist rejection of legislative history, a shift in his jurisprudence. Second, and presumably the cause of the first, Justice Thomas returned to the argument that intent, and thus the legislative history in which it is found, is illegitimate in principle — not just impractical. That line of argument signals a rejection of faithful agency and a shift from New Textualism’s embrace of faithful agency to a textualism that instead grounds itself in democratic interpretation. This Essay teases out what Digital Realty portends. It identifies the shift toward a New New Textualism. And it describes that textualism’s latest development, which rejects faithful agency (and with it all intent and almost all legislative history), replacing it with democratic interpretation. Last, this Essay then sketches a defense of the position that this New New Textualism, in developed form, stakes out

Why Austen, not Burney? Tracing the Mechanisms of Reputation and Legacy

During the 200th anniversary of Austen’s death in 2017, the narrative of Austen’s rise to fame and her ongoing celebrity circulated throughout modern culture. But how did this happen? When Austen died in 1817, it was not obvious that Austen would become the archetypal British woman writer. Frances Burney was far more famous in her lifetime than Austen was in hers, and Burney’s novels (particularly Evelina and Cecilia) achieved as much, if not more, critical acclaim than Austen’s works. By comparing the afterlives of Jane Austen and Frances Burney, the factors that shape legacy come into focus—and scholars can use some of these factors to shape the legacy of British women writers today

Image analysis in sedimentology as application for high-resolution grain size analysis: a case study of lake sediments from Tangra Yumco (Tibetan Plateau)

Abstract HKT-ISTP 2013 B

Millennial-scale oscillations and an environmental regime shift around the Middle to Late Holocene transition in the North Atlantic region based on a multiproxy record from Isfjorden, West Spitsbergen

Palynological and sedimentological analyses were performed on the sediment core HH16-1205-GC retrieved from the central Isfjorden, West Spitsbergen. The sequence, which spans the last 7000 years, revealed an overall cooling trend with an important climate shift between 4.4 and 3.8 cal. ka BP, in addition to millennial-scale oscillations. Sea-surface reconstruction from dinocyst assemblages indicates a decrease in summer sea-surface temperature, from 2.5 to 1.5 °C, and primary productivity, from 750 to 650 gC m−2 a−1 over the last 7000 years. From around 6.8 to 5.8 cal. ka BP, the sedimentological and palynological data suggest a predominant sediment supply from the inner part of the fjord, ice rafting, dense sea ice cover, strongly stratified water masses and high primary productivity. The interval from 4.4 to 3.8 cal. ka BP is marked by a layer of coarser material and a significant decrease in the grain-size mode. Our geochemical data show large-amplitude fluctuations after 2.0 cal. ka BP, while an increase in the dinocysts Impagidinium pallidum and Spiniferites elongatus from 2.0 to 1.2 cal. ka BP suggests enhanced Atlantic Water inflow. The dinocyst-based reconstructions also reveal large-amplitude millennial fluctuations in sea ice cover, summer sea-surface temperature and salinity. Wavelet analysis and cross-wavelet analysis on K/Ti ratio coupled with sea-ice estimates confirm a strong signal with a periodicity of 1200–1500 years