Faculty lead: Jared Ellias, Professor of Law, Harvard Law School
As a matter of black letter law, employees of Chapter 11 firms have limited formal control rights in a Chapter 11 bankruptcy case. They are not represented by official committees and do not have the right to vote on plans of reorganization. Management has a duty to represent investor interests through the concept of the bankruptcy estate, but not the interests of employees or other stakeholders. As a matter of practice, however, employee interests have an important informal defender in the bankruptcy judge. Bankruptcy judges frequently make decisions based on employee and other stakeholder interests, and investors strategically align themselves with employee interests to sway the judge. On this project, we use analysis of text from bankruptcy documents to document this strategy, and to understand the investor strategies that form in light of the bankruptcy judge’s role... Read more about Employee Priority in Corporate Bankruptcy
