Emory Bankruptcy Developments Journal


In light of the ongoing COVID-19 pandemic, bankruptcy law will play a crucial role in addressing the consequences of the global economic shutdown. Many large corporations in the U.S. will need to undergo chapter 11 bankruptcy proceedings or may attempt to reorganize their financial debt in an out-of-court workout. However, section 316(b) of the Trust Indenture Act of 1939 has long been blamed for making out-of-court restructurings practically impossible, because it requires unanimous approval from bondholders. In 2014, the National Bankruptcy Conference presented a solution for the inefficiencies in bond workouts by proposing a streamlined debt reorganization procedure for borrowed money in a new chapter 16 of the Bankruptcy Code. This Article argues that now is time to take a new look at the 2014 proposal from a comparative law perspective. Considering the legal situation in England and Wales as well as Germany, the Article outlines a proposal for a modern workout mechanism for bond debt.