In Financial Times, Ryan Preston Dahl Discusses Potential Impact of Proposed Bankruptcy Legislation

In Financial Times, business restructuring partner Ryan Dahl (New York and Chicago) discussed the potential impact of the “Stop Wall Street Looting Act of 2021,” sponsored by Sen. Elizabeth Warren (D-Mass.), among others.

In that piece, Ryan discusses how Senator Warren’s proposed legislation would make equity sponsors directly liable substantially all obligations of controlled portfolio companies as well as the extent to which that legislation intends to upend fundamental aspects of corporate law and finance. 

In particular, Ryan explains that the legislation would upend the “debtor-in-possession” concept, which lies at the heart of the U.S. Bankruptcy Code.

“It is difficult to read [the act] as something other than an attempt to create a favoured creditor class at the expense of all stakeholders” when “it is a baseline proposition of American bankruptcy law that the debtor in possession stands as a fiduciary for all stakeholders in bankruptcy.”