Congress Should Rewrite The Bankruptcy Examiner Mandate

Law360 (October 15, 2020, 4:02 PM EDT) -- Originally enacted in 1978, and largely unmodified since, Section 1104(c)(2) of the Bankruptcy Code mandates the appointment of an examiner when a debtor has over $5 million of unsecured debt.

Today, that threshold is routinely met, particularly in the context of the large retail bankruptcies that have been filed since the onset of the COVID-19 pandemic.

While the appointment of an examiner in Chapter 11 cases is not an extraordinary remedy, it is certainly not a common one. This infrequency is likely caused by two factors: (1) Courts have inconsistently interpreted the mandate contained in Section 1104(c)(2); and (2) creditors' committees,...

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