In our paper, Dodd-Frank for Bankruptcy Lawyers, which was recently made publicly available on SSRN, we identify the core congruities between an “Orderly Liquidation Authority” (OLA) created by the Dodd-Frank financial reform legislation and the Bankruptcy Code. Title II of Dodd-Frank removes bankruptcy court jurisdiction from only a narrow range of cases—“financial companies” whose failure is sufficiently threatening to market stability. The vast majority of giant businesses, including systemically important ones (i.e., the General Motors of the next great recession), are not “financial companies” within the meaning of Title II. They remain squarely in the province of bankruptcy law. Moreover, the mechanics of the new receivership process incorporate basic bankruptcy principles. They effectively permit reorganization as well as liquidation, debtor-in-possession financing, asset sales free and clear of existing liens, claw-back of prepetition fraudulent and preferential transfers, and safe harbors for financial contracts.

(more…)