No Harm, No Foul? The Recent Trend of Super Speed Chapter 11 Bankruptcy

Super speed chapter 11 bankruptcies have become a popular option for debtors seeking a quick restructuring process. Since In re Bluebird in 2006, courts have allowed debtors to complete a chapter 11 restructuring in record time, sometimes in less than a day. Such bankruptcies afford the debtor speed when the traditional chapter 11 timeline would effectively push the debtor into liquidation. In early super speed chapter 11 cases, the courts used the equity powers in section 105(a) of the Bankruptcy Code to analyze whether the circumstances warranted such speed. However, since 2016, courts have improperly asserted that the super speed prepackaged case is categorically statutorily authorized, abandoning an equity analysis. This legal trend subverts bankruptcy principles, providing debtors undue control over the case, denying creditors adequate notice, and improperly characterizing the court’s role as a mere facilitator of private bargaining. This Comment explores: (1) the balance of early prepackaged cases between the debtor’s need for an expedited timeline and the creditors’ rights to notice; (2) how post-2016 super speed chapter 11 cases undermine creditors’ rights and corrupt bankruptcy’s balance of power; (3) the various causes and effects of this recent legal trend; and (4) why courts should embrace active case management and sua sponte review of the super speed chapter 11 case. Finally, this Comment concludes by proposing an equitable framework to guide courts in weighing the debtor’s need for an expedited timeline against the creditors’ rights to notice when reviewing super speed chapter 11 cases sua sponte