Law and Courts in an Age of Debt

38 Pages Posted: 17 Mar 2023 Last revised: 13 Apr 2023

See all articles by Jared A. Ellias

Jared A. Ellias

Harvard Law School

Elisabeth de Fontenay

Duke University School of Law

Date Written: February 5, 2023


Judges perform very different analyses when investors ask for protection. When the petitioning party is a shareholder, the court will deploy broad equitable doctrines with an eye towards reaching a fair result. On the other hand, creditors usually find a much less sympathetic ear, as courts typically march through technical analyses such as examining whether the offending party violated a contract term, with far less concern for whether the outcome is fair. In an era where many firms are highly leveraged, the end result is that the role of the courts in regulating investor opportunism and creating boundaries for “market” conduct has been greatly diminished, with consequences for both real-world corporate behavior and the development of the law.

Keywords: debt equity conflict; corporate governance; corporate law; bankruptcy; debt finance

JEL Classification: K22; K20; M100; G33; G30; G34

Suggested Citation

Ellias, Jared A. and de Fontenay, Elisabeth, Law and Courts in an Age of Debt (February 5, 2023). University of Pennsylvania Law Review, Forthcoming, Duke Law School Public Law & Legal Theory Series No. 2023-22, Available at SSRN: or

Jared A. Ellias (Contact Author)

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States


Elisabeth De Fontenay

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

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