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Beyond True Sales - Securitization and Chapter 11

Stephen J. Lubben

Seton Hall University - School of Law

N.Y.U. Journal of Law & Business, Forthcoming

In this paper I mediate between the reality that securitizations serve useful, efficient purposes and the goal of preventing unnecessary corporate liquidations. Starting from the premise that the decision to include any party in a chapter 11 reorganization involves line drawing, I explain a principled reason for excluding some securitizations from the scope of chapter 11, while including other transactions - such as many of those at issue in Enron. Specifically, by considering the reasons why we ignore formalities in other related situations - under veil piercing, equitable subordination, and fraudulent transfer law - I explain why a line can be drawn that excludes typical securitizations from the chapter 11 estate. In the process, I suggest a functional analysis that would be more useful in making these types of determinations than the present reliance on whether or not there has been a true sale of assets as part of the securitization.

Number of Pages in PDF File: 43

Keywords: Securitization, Structured Finance, Chapter 11, Bankruptcy, Corporate Finance

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Date posted: January 6, 2005  

Suggested Citation

Lubben, Stephen J., Beyond True Sales - Securitization and Chapter 11. N.Y.U. Journal of Law & Business, Forthcoming. Available at SSRN: https://ssrn.com/abstract=576261

Contact Information

Stephen J. Lubben (Contact Author)
Seton Hall University - School of Law ( email )
One Newark Center
Newark, NJ 07102-5210
United States
973-642-8857 (Phone)
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