Bankruptcy Courts Today Reward ‘Fleecing’ Creditors, Stark Says

The rules of corporate bankruptcy in the US have changed so much in the past 15 years that they have rendered Chapter 11 closer to a weapon against creditors than a tool for restructuring, according to Brown Rudnick’s bankruptcy & corporate restructuring group Chair Robert Stark.

Following precedents set in Delaware in 2006 and 2007, with bankruptcy law today, “the only duties owed are to the company itself; there’s no duty to creditors,” Stark said on the Jan. 19 episode of Bloomberg Intelligence’s FICC Focus State of Distressed Debt podcast. “It really is an instruction from the courts: go ...