In the second installment of the Spring 2012 Faculty Workshop Series, sponsored by the Frances Lewis Law Center, Professor David Skeel, the S. Samuel Arsht Professor of Corporate Law at the University of Pennsylvania Law School, came to speak Monday about the draft of his article, States of Bankruptcy.
The paper discusses the possibility of allowing states to file for bankruptcy. In the article, Professor Skeel makes a case for the creation of a bankruptcy structure for individual states. He outlines that most of the traditional benefits from a bankruptcy framework would potentially exist for states, as well. Such benefits include establishing a more coherent priority structure for state obligations, providing additional restructuring tools, and helping to more equitably distribute the sacrifice of bankruptcy among creditors. Professor Skeel then addresses many of the principal concerns, including the constitutionality of a state bankruptcy and the potential for severley damaging credit ratings bondholder trust. Ultimately, Prof. Skeel concludes that bankruptcy would significantly improve on the existing strategies for dealing with a state’s financial collapse.
Many thanks to Professor Skeel for visiting W&L and sharing his paper with the faculty.