Non-profit hospitals show no mercy to creditors; in bankruptcy, their corporate structures allow them to 'cram down' plans of reorganization

Article Abstract:

Secured creditors can be at a disadvantage in the bankruptcy of a non-profit hospital since such an institution can employ strategies unavailable to the usual corporate debtor. Non-profits lend themselves to cramdown reorganization plans. Non-profit board members do not get dividends and, upon bankruptcy, have no right for corporate assets to be distributed to them. They also hold no equity interests. The case law teaches that A secured creditor might have to accept a reduced principal without obtaining control of the hospital if a nonprofit hospital with secured debt outstanding goes bankrupt.

Hospitals, Management, Finance, Corporate reorganizations, Debtor and creditor, Hospitals, Voluntary, Voluntary hospitals

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Bankruptcy in lieu of settlements? 'Amchem' ruling sparks hot debate on harsh alternative

Article Abstract:

The US Supreme Court's ruling in Amchem Products Inc v. Windsor on Jun 25, 1997, overturning a settlement that capped future asbestos claims, has clouded the possibilities for such sweeping mass tort suit settlements. Attorneys, however, believe US bankruptcy law may provide them with another avenue for handling claims and capping liability. The US National Bankruptcy Review Commission, charged with recommending bankruptcy law reforms, will probably suggest changes to ease handling of mass tort suits in bankruptcy court in its forthcoming report, due in Oct 1997.

Laws, regulations and rules, Reports, Product liability, Products liability, Mass tort suits, United States. National Bankruptcy Review Commission

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