July 23, 2021

James Conlan Speaks With The Wall Street Journal About the Role of Independent Directors in Bankruptcies

The Wall Street Journal reported in a recent article that some independent directors of bankrupt firms show bias in favor of the companies that hired them, according to a study published by the University of California Hastings College of the Law and Tel Aviv University. The study found that unsecured creditors — those who have no collateral for the money they are owed — recouped 21% less, on average, from bankrupt companies that had an independent director than from those that didn’t.

The publication turned to finance and restructuring partner Jim Conlan for insight on whether he thought the report’s findings apply to bankruptcy outcomes. Conlan told The Journal that outcomes are primarily determined by the dynamics of a given industry and a company’s business decisions, highlighting that it’s difficult to prove the lower recovery the researchers found is primarily driven by the appointment of independent directors.

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