Government Activism in Bankruptcy

It is widely recognized that bankruptcy law can stymie regulatory enforcement and present challenges for governments when regulated businesses file Chapter 11. less-widely understood with opportunities to advance policy goals if they are willing adopt tactics traditionally associated activist investors, a strategy we call “government activism.” The filings by Chrysler General Motors in 2009 famous example: the government of United States used process help both auto manufacturers resolve their financial distress while promoting objectives protecting union workers addressing climate change. A decade later, California applied its bargaining power Pacific Gas & Electric Company’s 11 case protect policies victims wildfires. These examples illustrate that, tapping into system, gain access exceptional powers debtor enjoys under law, which complement traditional tools appropriations regulation facilitate accelerate outcomes. This especially useful times urgency paralysis, activism provide pathway past veto players political system. However, making through system presents potential downsides as well, it may also allow evade democratic accountability obscure losses stakeholders forced absorb fund those