Showing papers in "University of Chicago Law Review in 1991"

The Plaintiffs' Attorney's Role in Class Action and Derivative Litigation: Economic Analysis and Recommendations for Reform

Abstract: Introduction ....................................... 3 I. The Role of the Entrepreneurial Attorney ......... 7 A. The Economic Rationale for Class Action and Shareholder's Derivative Litigation ........... 8 B. The Role of the Entrepreneurial Attorney in Class Action and Shareholder's Derivative Suits 12 1. The economic theory of agency and its applidation to standard litigation ........... 12 a) M onitoring ......................... 13 b) Bonding ........................... 15 c) Incentives .......................... 17 d) Residual loss ...................... 19 2. Application of agency cost theory to class and derivative cases ..................... 19

Protectionism As a Safeguard: A Positive Analysis of the GATT Escape Clause with Normative Speculations

Abstract: The General Agreement on Tariffs and Trade (GATT) establishes a multilateral framework for the liberalization of international trade in goods. Under the auspices of GATT, signatories have reduced tariffs affecting hundreds of billions of dollars in trade annually.1 GATT also constrains the use of quotas and other quantitative restrictions on imports and exports,2 the use of internal tax and regulatory policies to favor domestic over foreign producers,3 and a variety of other protectionist devices. Because of the extensive GATT restrictions on government interference with international markets, it is tempting to view the Agreement as a high-minded, trade-liberalizing undertaking, devoted to the pursuit of free trade and to the defeat of protectionist forces. But scholars have long argued that such a view of GATT is naive, and that it must instead be understood as an expedient bargain among the self-interested political leaders of GATT signatories. 4 Although GATT can largely be justified by sound arguments about the public interest in a liberal trading order, it is best understood with the aid of public choice theory. The subject of this Article is a particular GATT provision that is indeed difficult to comprehend without the public choice perspective-Article XIX, which allows signatories to renege upon their commitments to reduce trade barriers. More precisely, Article

Constitutionalism and Secession

Abstract: The Soviet Constitution guarantees a right to secede.' The American Constitution does not. Although some secessionists in the American South, invoking state sovereignty, claimed to find an implicit right to secede in the founding document, it was more common to invoke an extratextual and nonjusticiable "right to secede" said to be enshrined in the Declaration of Independence.2 In any case, no serious scholar or politician now argues that a right to secede exists under American constitutional law.3 It is generally agreed that such a right would undermine the Madisonian spirit of the original document, one that encourages the development of constitutional provisions that prevent the defeat of the basic enterprise.4 Eastern European countries are now deciding about the contents of proposed constitutions. They are often doing so in the context of profound cultural and ethnic divisions, both often defined at least roughly in territorial terms. These divisions have propelled

A New System of Corporate Governance: The Quinquennial Election of Directors

Abstract: Corporate governance is a means, not an end. Before we can speak intelligently about corporate governance, we must define its goals. In much of the recent academic literature on corporate governance, however, the goals are either ill-defined or assumed without examination. Academic writers commonly assume that a corporate governance system should be designed primarily to ensure that the actions of a corporation's managers and directors accurately reflect the wishes of its stockholders.' This assumption rests in turn on the premise that stockholders, as owners of the corporation, have the intrinsic right to dictate the corporation's course and receive its profits. Once this premise is accepted, the recognition of the separation of ownership and management as the central characteristic of the modern public corporation2 leads inexorably to the conclusion that the central goal of corporate governance is to discipline managers, that is, make managers conform their actions to the desires of stockholders. This line of academic analysis has coincided with the rise of hostile takeovers. Ignoring the quite varied sources and motivations of hostile acquirors, academic writers have embraced the hostile takeover as the free-market device to rid corporations of bad managers and give stockholders their entitled profit in the pro-

Constitutionalism in Eastern Europe: An Introduction

Abstract: Since 1989, seven countries in Eastern Europe have undertaken the transition from one-party rule to constitutional democracy: Albania, Bulgaria, Czechoslovakia, Hungary, Poland, Romania, and Yugoslavia. Six of the seven are currently rewriting their constitutions. The exception is Hungary, although that country's constitution is very much a patchwork, and new constitutional efforts can be expected there, too, within the next few years. In addition, several of the constituent republics are writing or revising their constitutions, including the Czech and the Slovak Lands in Czechoslovakia and Croatia and Slovenia in Yugoslavia. Finally, the German Democratic Republic had made some progress toward creating a new constitution before the process was overtaken by unification. Altogether, therefore, we are dealing with at least a dozen constitution-making processes. This wave of constitution-making is not altogether unique. In the late 1700s, the individual American states, the United States itself, and France enacted a series of democratic constitutions. The wave of revolutions in 1848 also included brief constitutional epi-

The Failure of Sentencing Guidelines: A Plea for Less Aggregation

Abstract: To a considerable extent, the Federal Sentencing Guidelines have substituted punishment based on aggregations of similar cases for individualized punishment. This paper argues that the movement from individualized to aggregated sentences has marked a backwards step in the search for just criminal punishment. Some things are worse than sentencing disparity, and we have found them. The paper does not, however, advocate a return to the pre-guidelines system of broad sentencing discretion. Instead, it proposes a less ambitious system of sentencing guidelines?one in which a sen tencing commission's resolution of specific, recurring sentencing issues and of paradigmatic cases would provide benchmarks for sentencing judges. Aggregation?the treatment of many cases all at once?is often appropriate. Indeed, all legal rules aggregate. Treating unlike cases alike sometimes can promote economy and simplicity of administration. The federal sentencing guidelines, however, do not save work or money. To the contrary, 90 percent of the judges who responded to a survey by the Federal Courts Study Committee reported that the guidelines had made sentencing procedures more time consuming. In addition, our overburdened federal appellate courts now decide thousands of cases each year concerning application of the guidelines.2 The principal argument for the sentencing guidelines has not been simplicity or ease of admini stration. It has been that, although aggregated sentences may prove unjust in many cases, guide lines limit the play of judicial personality and inhibit discrimination on invidious grounds. The injustice produced by grouping unlike cases, in other words, has been justified as a means of promoting equality and preventing greater injustice.

Bondholder Coercion: The Problem of Constrained Choice in Debt Tender Offers and Recapitalizations

Abstract: t Adolf A. Berle Professor of Law, Columbia Law School. ft Professor of Law, UCLA Law School. We are grateful for useful insights and information to Richard S. Wilson of Fitch Investors Service, Inc., to Gregory Smith of Indepth Data, Inc., and to Salomon Brothers for data on high-yield debt restructurings. We are also indebted, for their helpful comments, to Alison G. Anderson, Ronald Gilson, J. Mark Ramseyer, Mark Roe, Richard H. Sander, and William D. Warren. I See Securities and Exchange Commission, Recent Developments in the High Yield Market 14-15 (1990) (staff report) (\"SEC Report\"); General Accounting Office, Financial Markets: Issuers, Purchasers, and Purposes of High Yield, Non-Investment Grade Bonds (Feb, 1988). ' The rate of defaults on junk bonds is increasing rapidly. The latest data show that corporations defaulted or missed scheduled payments on $8.2 billion of debt, a record level, during the first quarter of 1991, according to Moody's Investors Services, Inc. See Constance Mitchell and Anitz Raghavan, Junk Bond Prices Hold Steady Despite Report That Defaults Hit a Record in the Latest Period, Wall St J C17 (Apr 9, 1991). In 1988, according to data assembled by Salomon Brothers, $2.5 billion in principal amount of junk bonds defaulted; in 1989, $8.8 billion defaulted; and, during the first nine months of 1990, $10.8 billion defaulted. See Anne Schwimmer, Hard Truths About the Restructuring Business, Investment Dealers' Digest 18 (Nov 26, 1990). One expert has esti-

Revolutions in Eastern Europe

Abstract: Eastern Europe has ceased to exist. This artificial creation of Yalta existed only as long as the Soviet Army could support the doubtful legitimacy of communist regimes throughout the region. When it became obvious that the Soviets were not going to use force to stop the wave of change in their European empire, the only thing needed was the first hole in the dike. After the change in the government of Poland and the dissolution of the Communist Party in Hungary, no one could stop the flood of freedom. The pace of events was astonishing-less than a year, if counted from the beginning of the Round Table negotiations in Poland, on February 6, 1989, to the death of Nicolae Ceaucescu and the victory of the revolution in Romania, in late December. Only three months passed from the moment that the first noncommunist Polish government took office in September and the revolution in Romania. The fall of communism in Eastern Europe was fast. It was so fast that a comparison with another swift wave

All Quiet on the Eastern Front

Abstract: The title that I have chosen for this essay is something of a contradiction in terms. There have been enormous upheavals in Eastern Europe during the past two years. Indeed, it is unlikely that the pace of innovation and surprise will slacken in the future, even if its direction may change in unexpected, and even unwelcome, ways. There will be many testimonies to the enormous shifts that have taken place there, to the fond hopes that have been realized, as in Hungary and perhaps Poland or Czechoslovakia, and to those that have been dashed, as in Romania. If each day's events brings us news of ferment and change, then why now of all times would anyone have the temerity to make an ironic play on words on Erich Maria Remarque's classic of another era, All Quiet on the Western Front? There are reasons for this apparent twist, stemming from the two ways to look at the transformative events in Eastern Europe. One way speaks of culture and transition and thrives upon local knowledge. The other looks at the ebb and flow of events from the loftier reaches of political and constitutional theory. Each is worth a bit of elaboration. The first approach concentrates on the shift from monolithic political control to (if we are lucky when the dust settles) some form of democratic government-a form of government that constantly probes the uncertain line between market and government ordering. Making an accurate assessment of the way events will play out requires an enormous amount of knowledge about specific conditions that is clearly beyond the ken of the outsider, and in all likelihood the insider as well. There are always questions of transition that are by nature heavily fact-specific. As the standard analysis of game theory (or at least chaos theory) so well shows, the ultimate outcome in a complete game is often highly sensitive to small

In Defense of Smith and Free Exercise Revisionism

Abstract: In Employment Division v Smith, the Supreme Court held that the Free Exercise Clause does not compel courts to grant exemptions from generally applicable criminal laws to individuals whose religious beliefs conflict with those laws.' Professor Michael McConnell has powerfully attacked Smith in a recent article in the Review.2 In this essay, I defend Smith's rejection of the constitutionally compelled free exercise exemption against McConnell's critique. The Smith opinion itself, however, cannot be readily defended. The decision, as written, is neither persuasive nor well-

Constitutional Politics in Poland: A Report on the Constitutional Committee of the Polish Parliament

Abstract: This Article is neither a comprehensive historical account of the work of the Constitutional Committee of the Polish Parliament nor a theoretical synthesis of recent constitutional developments in Poland. Rather, it is a mixture of theory, anecdote, and personal reminiscence that I feel at this point most capable of providing. As will be seen, the work on the new Polish constitution has in some ways been overtaken by events that unfortunately have always lurked in the background of the drafters' work and influenced their decisions. In fact, it is not clear that Poland will enact anything resembling the draft prepared in the process that this Article describes, and it would be premature to attempt a more systematic narration.

Paternalistic Pension Policy: Psychological Evidence and Economic Theory

Abstract: Left to their own devices, many people will not save enough for their old age. This hard truth about human behavior has led American government to make a long and expensive commitment to retirement security programs. Indeed, Congress has made retirement security the most expensive commitment on the American public policy agenda. Of the two main components of this policy, one, Social Security, is by far the most costly domestic program. The other, the system of tax subsidies to employer pensions, is the federal government's largest tax expenditure.2 With the great expenditures on these programs, Congress has set out to guarantee that even the most profligate young worker will have something to retire on. These massive programs, however, have not entirely achieved their goal. As a host of critics have pointed out, pension coverage remains distressingly spotty and inequitable.3 The highest subsi-

Constitutional Reform in Czechoslovakia: E Duobus Unum?

Abstract: Czechoslovakia was created in 1918, when the Versailles Peace Conference carved the lands of the neighboring Czech and Slovak peoples out of the Austro-Hungarian Empire and created a new democratic state. This arranged marriage was a voluntary act of self-determination by those two long-repressed peoples, but they did not marry for love and they have not been very happy together. Ever since, the process of constitution-making in Czechoslovakia has been critically influenced by the historic division between the Czechs and Slovaks. Now that the nation has cast away its communist shackles, so smoothly and nonviolently that the process has been dubbed the \"Velvet Revolution,\" it has taken up the task of drafting a new and democratic constitution. Predictably, the differences between Czechs and Slovaks are proving to be the major obstacle to an equally smooth resolution of the principal constitutional issues. In this Article,1 we discuss the approach of the newly renamed Czech and Slovak Federative Republic (CSFR) to four major constitutional issues: federalism, the bill of rights, an independent judiciary, and the separation of powers among the president, the cabinet, and the federal legislature. Before one can understand what is transpiring in the CSFR, a brief review of the political and social history of the nation is necessary. As with other Eastern European countries, many of Czechoslovakia's current difficulties originate not only in the effects of

Why Did the Revolutionary Lawyers Confuse Custom and Reason

Abstract: t Assistant Professor of Law, Stanford University. B.A., Yale, 1980; M.A., Columbia, 1982; Ph.D., The University of Chicago, 1987; J.D., Yale, 1988. Earlier versions of this Article were presented to the American Society for Legal History, the Harvard Law School Legal History Series, and the Stanford Legal History Workshop. I am grateful to participants in all these groups for their comments. I would in particular like to acknowledge helpful suggestions from Keith Baker, Paul Brest, Mauro Cappelletti, Elizabeth Fowler, Charles Gray, Thomas Grey, Brian Levack, David Lieberman, Deborah Weiss, and Harry Wellington. I am especially grateful for sharp criticism by Charles Donahue. This research was supported by The Stanford Legal Research Fund, made possible by a bequest from Ira S. Lillick and by gifts from other friends of the Stanford Law School. 2 John Adams, A Dissertation on the Canon and Feudal Law, in Charles Francis Adams, ed, 3 The Works of John Adams 447, 463 (Charles C. Little and James Brown, 1851). 2 Louis Boullenois, Dissertations sur des Questions qui Naissent de la Contraristg des Loix et des Coutumes xiv, xxii (Mesnier, 1732). 3 Ludwig T. v. Spittler, Vorlesungen iber Politik, in Karl Wfchter, ed, 15 Stmmtliche Werke 130-31 (J.G. Cottaschen, 1837). On the context, see Erwin H6lzle, Das Alte Recht und die Revolution 76-84 (R. Oldenbourg, 1931).

Copyright at the School of Patent

Abstract: It is a remarkable fact that the doctrine of patent law generally coheres while the doctrine of copyright does not. Two features sharpen the contrast. First, the two laws perform the same function. People debate whether these regimes should strive for justice for creators or economic efficiency for consumers, but no partisan recommends one goal for patent and another for copyright. Indeed, the obvious but largely unasked question is why we have two different laws at all, rather than a single system of innovation policy. Second, lawmakers have fiddled with the two fields for an equally long time. The first Congress passed its first patent statute on April 10, 17901 and its first copyright statute less than eight weeks later.2 One would suppose that the same group working on essentially ,the same problems for the same time would have figured them out or fouled them up to the same degree. Yet today our law of patents basically makes sense, while the core of copyright law continues to be baffling. Part I of this Article supports the claim that three central elements of copyright doctrine lack justification and coherence. The first confounding element is the law of "idea" and "expression," with its related doctrine of "merger." Although this law sets forth the central limit on the extent of copyright protection, it is cast in conclusory terms that fail to give judges, lawyers, and authors a way to determine its *scope. The second conundrum is copyright's test for determining when one work infringes another and, in particular, the appropriate role for expert versus lay opinion. Here the problem is not that the law presents a single agreed-upon standard that is intellectually bankrupt. Rather, the law presents a blizzard

Some New World Lessons for the Old World

Abstract: ... [Y]ou are called upon to deliberate on a new Constitution for the United States of America. The subject speaks its own importance; comprehending in its consequences nothing less than . . . the fate of an empire in many respects the most interesting in the world. It has been frequently remarked that it seems to have been reserved to the people of this country, by their conduct and example, to decide the important question, whether societies of men are really capable or not of establishing good government from reflection and choice, or whether they are forever destined to depend for their political constitutions on accident and force. . . . [A] wrong election of the part we shall act may, in this view, deserve to be considered as the general misfortune of mankind.1

Cameras in Teddy Bears: Electronic Visual Surveillance and the Fourth Amendment

Abstract: Distinguished judicial figures from Justice Brandeis to Judge Posner have recognized that electronic surveillance poses a serious threat to the American public's constitutional interest in being \"secure in their persons, houses, papers, and effects.\"1 In 1928, Justice Brandeis expressed alarm that the unregulated use of technology enabling the government to wiretap a telephone endangered the public's \"right to be let alone-the most comprehensive of rights and the right most valued\" by \"civilized\" people.2 He warned that \"[a]s a means of espionage, writs of assistance and general warrants are but puny instruments of tyranny and oppression when compared with wire tapping.\"' 3 Judge Posner, in a 1984 Seventh Circuit opinion, declared that \"television surveillance is exceedingly intrusive,.., and inherently indiscriminate, and.., could be grossly abused-to eliminate personal privacy as understood in modern Western nations.\" '4 The surveillance that was the object of Judge Posner's warning, electronic visual surveillance (\"EVS\"), is the type of government investigation that is perhaps the most dangerous to personal

Sufficient Efficiency: Fraud on the Market in the Initial Public Offering Context

Abstract: The typical modern investor often fails to read the detailed prospectus of an issuing company before purchasing its securities. It is therefore rare that all the plaintiffs in a class action suit can claim that they relied on the prospectus or other public information in deciding to buy these securities. Hence, the standard used by the court to establish collective investor reliance on such information under the Securities and Exchange Commission's Rule 10b52 plays a critical and controversial role in class action suits. The \"fraud on the market\" theory makes it easier for class action plaintiffs to show reliance. This theory posits that, under certain circumstances, plaintiffs may rely on the market process to incorporate information about the security into the price, and recover damages if the defendant has in some way \"defrauded\" the market. In Basic Inc. v Levinson, four of the six Supreme Court

A Response to Professor Marshall

Abstract: I said in my article critiquing Smith that the theoretical argument in support of its position is "serious and substantial, even if mistaken."' Professor Marshall demonstrates the truth of at least the first of these propositions. Space does not permita point-bypoint rebuttal, but a few areas of disagreement are sufficiently important to warrant mention. The heart of Marshall's position is that free exercise exemptions are a form of "favoritism for religious belief over other beliefs.' '2 He can say this, however, only by ignoring the symmetrical character of the free exercise and establishment principles. Both "single out" religion for special treatment, but sometimes this is an advantage and sometimes a disadvantage. When a Jehovah's Witness refuses to work in an armaments factory, he is constitutionally entitled to unemployment benefits,3 while a secular antiwar activist in the same position is not.4 In this context, it may appear that religion is "favored." But if a public school football coach (or even a member of the team) offers a prayer or other religious inspiration before the game, he will be stopped; a girls' tennis coach who offers feminist words of inspiration before the game engages in protected speech. When the Reverend Jerry Falwell's Liberty University applied recently for public bonds, it was turned down because of its religious teaching;' no one would consider turning down Antioch College because of its secular ideology. In these contexts, religion seems "disfavored." It is simply not accurate to describe the pre-Smith constitutional scheme, taken as a whole, as "favoritism" for religion. It would be possible to accept Marshall's position on free exercise of religion (no "singling out") and still maintain consistency

Stanley Fish and the Future of Pragmatism in Legal Theory

Abstract: Stanley Fish's recent book review' measures Richard Posner's The Problems of Jurisprudence2 more by the importance of the questions it raises than by the coherence of its answers. That standard enables Professor Fish to rank Judge Posner's book with the best of post-war legal thought (p 1475). The same standard demands a similar assessment of Fish's review. Few writings match the economy and punch with which it points legal theory in the right direction. Fortunately for all of us-including Fish-the right direction is not the one he says he favors.

The Endangered Species Act and Ursine Usurpations: A Grizzly Tale of Two Takings

Abstract: In an attempt to reverse the trend toward species extinction, Congress enacted the Endangered Species Act ("ESA") in 1973.3 The ESA declares it illegal to "harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect" any "endangered species."' The ESA's broad prohibition against almost any conduct-whether intentional or accidental-that interferes with the activities of an endangered species reflects Congress's considerable concern with species preservation. In its sole pronouncement on the social value of the ESA, the Supreme Court generously appraised Congress's commitment to the preservation of endangered species. In Tennessee Valley Authority v Hill, the Court found that the ESA's structure and legislative history demonstrated conclusively that Congress intended "to halt and reverse the trend toward species extinction, whatever the cost."" Congress considered the goal of

Fifth Amendment Limitations on the Use of Police Testimony to Rebut the Insanity Defense

Abstract: John Hinckley, Jr.'s acquittal by reason of insanity for the attempted assassination of President Reagan outraged many observers. Crucial to the success of Hinckley's insanity plea was the trial court's exclusion of "demeanor"' testimony offered by two FBI agents who had unlawfully interrogated Hinckley without the presence of the attorney he had requested.2 The D.C. Circuit affirmed the exclusion of that evidence on Fifth Amendment grounds.3 Specifically, the court rejected the government's arguments for a waiver of Fifth Amendment protection and, alternatively, for a new insanity rebuttal exception to the exclusionary rule enunciated in Miranda v Arizona.4 -Six years later, the Eleventh Circuit refused to apply Hinckley when it upheld the admission of police demeanor testimony in Jones v Dugger.5 The court held that the prosecution could present a police detective's opinion testimony to rebut Jones's insanity defense, despite Miranda violations, where the detective never revealed Jones's specific statements and gave no indication that his opinion was based on the substance of Jones's story.6 Even though five expert witnesses agreed that Jones suffered from serious mental illness,7 the jury apparently relied on the officer's lay

"Unregulation" and Broadcast Financing: New Ways for the Federal Communications Commission to Serve the Public Interest

Abstract: Sixty-four years ago, Congress set out to regulate the broadcasting industry. The Radio Act of 1927,1 and its successor, the Federal Communications Act of 1934,2 created the Federal Communications Commission (FCC). Congress charged the FCC with regulating in the "public convenience, interest, or necessity."3 The FCC, in turn, created specific regulations as well as more general policies to carry out its legislative mandate. Over the next few decades, it controlled ownership licenses and broadcast finance, restricted multiple ownership, oversaw station operations, issued guidelines for commercial and non-entertainment programming, and regulated in a host of other ways. One such general policy governs the overlap of FCC policies with state and federal laws. The FCC accommodates other such laws when doing so does not conflict with the Communications Act; it has also altered many of its policies to make its regulations consistent with state and federal laws. While this policy of accommodation has stayed constant over time, many other policies changed in the early 1980's, as the FCC began to see its role in a new light. In 1981, President Reagan appointed Mark Fowler to chair the FCC;4 Fowler in turn set out to deregulate the broadcasting industry. Under his leadership, the FCC abandoned much of its reliance on rules governing every aspect of broadcast ownership and operation. Largely as a result of Fowler's efforts, the FCC currently views efficiency and broadcaster discretion as the best ways to serve the

Section 2 of the Voting Rights Act and Judicial Elections: Application and Remedy

Abstract: Until recently, the question of whether ? 2 of the Voting Rights Act' applies to judicial elections seemed to have been resolved. Both the Fifth and Sixth Circuits had considered the issue and decided that the scope of ? 2 was broad enough to encompass judicial elections.2 The Attorney General of the United States and the Civil Rights Division of the Justice Department agreed with this conclusion.3 Most district courts that had been presented with the issue also agreed that ? 2 applied with full force to elected judges.4 Commentators assumed that the issue was settled.5 The Fifth Circuit resurrected the controversy with its en banc opinion in League of United Latin American Citizens ("LULAC") v Clements.6 The majority held that ? 2 of the Act did not apply to judicial elections.7 This holding was founded on the argument that the language of ? 2(b), which provides that ? 2 is violated when protected minorities "have less opportunity than other members of

Earth First? CERCLA Reimbursement Claims and Bankruptcy

Abstract: The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) establishes a statutory regime for cleaning up sites contaminated by hazardous wastes.' At the core of CERCLA, the liability provisions allow the Environmental Protection Agency to demand reimbursement from a variety of private parties for costs incurred in decontaminating polluted sites.2 Most importantly, CERCLA allows recovery from the current owner of the polluted site, regardless of that party's actual contribution to the contamination of the land.3 Owners of polluted land, however, sometimes become insolvent and seek the protection of the bankruptcy laws.4 Courts must then decide to what extent the EPA can recover expenses from an owner in bankruptcy. This question is most difficult when the hazardous substances are released before the filing of the bankruptcy petition, but the EPA does not seek reimbursement until after the bankruptcy proceeding has begun. In pursuing reimbursement, the EPA is normally an unsecured creditor.5 Unsecured creditors share pro-rata in the distribution of assets.6 The assets distributed, however, are usually worth far less than the outstanding claims, often resulting in payment of only ten or twenty percent of the face value of the claims.7 Because of this,