Contact:
w:st='on'>John Hartgen
(703) 739-0800
href='mailto:jhartgen@abiworld.org'>
color='#0000ff' size='2'>jhartgen@abiworld.org
ABI ENDOWMENT
TO FUND STUDY OF THE PREVALENCE OF SUBSTANTIVE CONSOLIDATION IN LARGE
PUBLIC COMPANY BANKRUPTCIES
May 23, 2006, Alexandria,
Va. — The American Bankruptcy Institute Endowment Fund
has awarded a $22,000 grant to Prof. William H. Widen of the University
of Miami School of Law to study the prevalence of substantive
consolidation in large public company bankruptcy proceedings.
Substantive consolidation is a judicially created remedy where the
assets and liabilities of two or more entities are pooled, and the
pooled assets are aggregated and used to satisfy the claims of creditors
of all the consolidated entities.
Prof. Widen’s motivation
for the study is to find a correct understanding of substantive
consolidation and its uses to aid courts as they consider the scope and
limits of this doctrine. He has so far found that case law rhetoric,
which suggests that substantive consolidation should rarely be used, is
at odds with actual practice, which finds use of the doctrine to be a
common and essential tool of case administration.
'I hope this research will
provide a better understanding of the conditions under which the
corporate form is respected and ignored in practice,” Prof. Widen
said. “This may allow for a more precise formulation of the
contours of substantive consolidation doctrine which, though extremely
important for business reorganizations, remains unsettled at this
time.'
The study will expand and
complete a preliminary study in which Prof. Widen found that 11 of the
top 21 bankruptcy proceedings (measured by asset size) from 2000-2004
used the substantive consolidation doctrine as part of the
reorganization. Prof. Widen and his research staff will collect and
analyze primary-source materials for additional cases from 2000-2004 to
arrive at a more definite frequency number for large public company
bankruptcies. Its goal is to show that proper formulation of the
doctrine is essential for the efficient reorganization of corporate
groups.
The ABI Endowment Fund was
created in 1989 to provide a secure financial base for the Institute and
to provide resources for insolvency research and education. Projects
eligible for Endowment funding include research by individuals or
entities relating to bankruptcy or insolvency; surveys or other
analytical investigation; the education of judges, court personnel,
other governmental personnel and the general public; scholarships or
other educational grants; support for the Robert M. Zinman Resident
Scholar; and support for both the Chief Judge Conrad B. Duberstein
National Bankruptcy Memorial Moot Court Competition and ABI’s
Corporate Restructuring Competition. Since 1998, the Fund has awarded
nearly $500,000 in grants.
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ABI is the largest
multi-disciplinary, nonpartisan organization dedicated to research and
education on matters related to insolvency. ABI was founded in 1982 to
provide Congress and the public with unbiased analysis of bankruptcy
issues. The ABI membership includes more than 11,500 attorneys,
accountants, bankers, judges, professors, lenders, turnaround
specialists and other bankruptcy professionals providing a forum for the
exchange of ideas and information. For additional information on ABI,
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