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28 Am. Bankr. Inst. L. Rev. 1 (2020)

handle is hein.journals/abilr28 and id is 1 raw text is: BEAUTY IS IN THE EYE OF THE BONDHOLDER: A BUNDLE OF RIGHTS THEORY OF ENFORCEABILITY OF CHAPTER 11 VOTING ASSIGNMENTS CAMERON SCHLAGEL* & CRAIG AVERCH** TABLE OF CONTENTS In tro d u ctio n .................................................................................................................2 I. The Bankruptcy Code.............................................................................................3 A. Overview ...........................................................................................................3 II. A ssignm ent of V oting R ights.................................................................................8 A. Bankruptcy Law and Policy and the Enforcement of Any Indenture Term Requiring the Transfer or Assignment of Subordinated Creditors' Voting Rights to Senior Creditors ..................................................10 1. The Expansive Theory of Enforcement of section 510(a) ...........................10 2. The Non-Enforcement Theory .....................................................................11 B. The Bundle of Rights Theory of Chapter 11 Voting Assignments ..............16 1. The Allowed Claim: Defining A Creditor's Rights in Bankruptcy..............17 2. A Creditor's Allowed Claim is a Bundle of Rights and the Right to Vote on the Plan is but One Stick in the Creditor's Bundle .....................22 3. Enforcement of Voting Assignment Provisions Neither Precludes the Junior Creditor from Participating in the Administration of the Bankruptcy Estate, Nor Does It Leave the Junior Creditor Without Remedies to Protect Its Interest ...................................................................31 Conclusion ................................................................................................................38 * Cameron Schlagel served as a law clerk to the Honorable Ernest M. Robles, Bankruptcy Judge for the United States Bankruptcy Court Central District of California. Cameron received his J.D. in 2017 from Loyola Law School Los Angeles where he served as Editor-in-Chief of the Loyola Los Angeles International & Comparative Law Review, Volumes 39 & 40. ** Craig Averch is a Partner within the Los Angeles Office of White & Case, where he heads up the Financial Restructuring and Insolvency Practice. Craig has extensive experience, gained through many years' involvement in a variety of proceedings throughout the United States and Central and Eastern Europe. He counsels clients across a wide range of industry sectors including transportation, real estate, retail, textile, oil and gas, energy, banking and financial services, healthcare, manufacturing, high-tech and telecommunications. Craig has been active in academic circles for a number of years, and is currently enjoying his second spell as Adjunct Professor at the Pepperdine University School of Law. He has also previously been Adjunct Professor at the Southern Methodist University's Dedman School of Law. 1