Protect Their Interests continued from page 51 device of myth, but instead as a way for those in power to manipulate the legal system to retain power. Morgan embraced Gould’ s system and popularized it with good“ spin.” We see the same basic form at work in today’ s private equity-backed chapter 11 cases. Continuing to attribute the goals of chapter 11 to Morgan and his supposed good intentions represents little more than a blind acceptance of his skillful public relations.
I thus offer a critical look at the DNA of a system of vital economic importance. This widely accepted story of corporate bankruptcy allows a sheen of“ for the good of the people” to be applied to reorganization. In fact, the actual origin story exposes that it was developed as a way for power to maintain power. Only by acknowledging the true roots of the system can we understand its problems and how it might be fixed.
Too often blind faith, an outgrowth of the Morgan myth, is weaponized to dispel criticism aimed at the corporate bankruptcy system we have. When critical judgment raised against the current system is scorned as“ populist,” scholars and practitioners adopt a dangerous myopic stance. By understanding that today’ s embrace of“ deals” has its roots in Jay Gould’ s quest to retain control, we can see the need for more judicial skepticism about the deals that are presented to them – even those with marvelous ostensible support – and more understanding of what is really going on.
Indeed, one large policy question looming over the entire field is whether it makes sense to provide public support( through courts and the power of law) to maintain what amounts to a dueling ground. We may be largely indifferent to the question of“ who wins” as between Hedge Fund A and Private Equity Fund B, but why should taxpayers pay for the arena for such clashes? And who precisely gets hurt in these clashes? The historical approach I adopt in this book helps make these questions – and their answers – plain.
NextGen Summary continued from page 37 a“ tariff case” is nearly impossible when tariff pressures coincide with interest rate stress and other distress drivers. Guilherme França pointed to Brazil’ s agribusiness and chemical sectors— Raízen’ s distress was not caused by tariffs, but the overlay made it harder to navigate. Sayuri Tago described Japanese automotive and export-dependent companies struggling with unpredictability down the supply chain, with some, like Mitsubishi, expanding sales channels outside the U. S. while sake makers and confectionery companies move production stateside.
Panelists agreed that the persistent uncertainty(" even once a deal is reached, is it still a deal?”) is reshaping corporate strategy. Companies are second- and third-sourcing, stop-gapping with private credit, and investing in“ friend-sourcing.” Data from Octus showed only 12 companies explicitly citing tariffs in restructuring filings this year, but panelists cautioned the real number may be far higher when indirect effects are counted. State-Owned Enterprises in Distress The fourth panel tackled a niche but increasingly important topic: the restructuring of state-owned enterprises( SOEs), which collectively hold an estimated $ 45 trillion in assets under management globally. As panelists noted, SOEs occupy an awkward space, not quite sovereign, not quite private, and their distress rarely fits the standard insolvency playbook.
Andrew Kissner discussed Puerto Rico’ s PREPA restructuring under the PROMESA law, highlighting how the absence of an insolvency backstop deprived the process of a credible inflection point. Without the threat of formal
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