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Why Think About Delaware?

posted by Stephen Lubben

In his response to my thoughts about Delaware, Lynn LoPucki writes that "many believe Delaware venue is not worth discussing because there is no way to ban it while Joseph Biden remains in the Senate."  To the extent that this suggests I am wasting my time, it would be easy to dismiss as the unkind words of a respected scholar who has been harshly attacked by some in the bankruptcy community.  After all, why is my paper less useful than his book?  Senator Biden has been entrenched for a long, long time, long before Courting Failure came out.

But I do think that Lynn's comment raises an important point:  why do scholars think and write about issues that will never change?  In this case, I have two responses.  First, I'm not sure that the Senator will be in his post for that much longer.  While his Presidential hopes are unlikely to be fulfilled, it is quite possible that he could take a cabinet post in a future administration.

Second, my sense is that bankruptcy practitioners and judges are still smarting from Lynn's criticisms.  Even those folks that support removing Delaware's privileged place in the chapter 11 system, which they argue is inherently unfair in a supposedly uniform federal system, often express their discomfort with Lynn's claim that the courts he highlights were not acting in good faith. 

For these two reasons alone I think studying Delaware still has some merit.  I'd be interested in what others think about this.

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I don't think any of us are wasting our time in continuing the Delaware debate. Delaware is the key to understanding the failure of the bankruptcy system in the context of large, public companies. Reorganization failure rates have been sky high, dozens of companies have been sold at prices only half what they would have brought in reorganization, professional fees are out of control, and cases are processed thousands of miles from where the creditors and employees are located. Our job is to discover the truth even when we can't change the world.

See response to initial post regarding my agreement with Lynn.

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