Emory Bankruptcy Developments Journal


John Folkerth


Claims trading, the buying and selling of creditor claims, is a common part of modern bankruptcy. Most scholars denounce claims trading as a disruptor in the bankruptcy process. What the current research fails to recognize is that confining the analysis on claims trading to the single greatest-frequency period leads to incomplete theories. In reality, claims trading takes place outside of this period as well. When reexamined outside of the mainstream's contexts (i.e., prior to the petition date or after plan confirmation), claims trading can offer significant benefits. Trading at these periods fosters healthier bargaining between the debtor and its creditors and enhances the likelihood of a swift procedure. Thus, bankruptcy constituents should contemplate and, moreover, endorse claims trading at either the pre-petition or post-plan confirmation phases so as to ease concerns about a trade's disruptive capacity inside a bankruptcy case.