Abstract

http://ssrn.com/abstract=965574
 
 

Footnotes (30)



 


 



Pulling a Rabbi Out of His Hat: The Bankruptcy Magic of Dick Posner


Randal C. Picker


University of Chicago - Law School


University of Chicago Law Review, Vol. 74, 2007
University of Chicago Law & Economics, Olin Working Paper No. 330

Abstract:     
This essay was written for a volume celebrating Judge Richard Posner's 25 years on the bench. The article considers his opinion in Bank of America v. Moglia, which addresses the status of rabbi trusts in bankruptcy. The rabbi trust is first and foremost a tax device, a way to ensure a contigent delayed payment and yet do so without incurring current tax income to the beneficiary of the trust. But the key condition that delays the receipt of income - namely that the assets of the trust remain available to the general creditors of the entity creating the trust - means that the trust operates as an asset partitioning device and a way to protect assets for unsecured creditors from potential invasion by secured creditors. Asset partitioning is ubiquitous, and we see it in many forms, such as limited liability corporations and securitization. It is rare to see a device that works to the benefit of a changing group of general creditors. The rabbi trust, as seen in Moglia, emerges as superior to the negative pledge, which may be its closest cousin.

Number of Pages in PDF File: 19

Keywords: Richard A. Posner, Judge Posner

Accepted Paper Series


Download This Paper

Date posted: February 26, 2007  

Suggested Citation

Picker, Randal C., Pulling a Rabbi Out of His Hat: The Bankruptcy Magic of Dick Posner. University of Chicago Law Review, Vol. 74, 2007; University of Chicago Law & Economics, Olin Working Paper No. 330. Available at SSRN: http://ssrn.com/abstract=965574

Contact Information

Randal C. Picker (Contact Author)
University of Chicago - Law School ( email )
1111 E. 60th St.
Chicago, IL 60637
United States
773-702-0864 (Phone)
HOME PAGE: http://www.law.uchicago.edu/Picker/
Feedback to SSRN


Paper statistics
Abstract Views: 1,909
Downloads: 326
Download Rank: 49,533
Footnotes:  30

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.500 seconds