Wednesday, April 11, 2018

Bruckner on Terminating Tenure in Bankruptcy

Matthew A. Bruckner (Howard University School of Law) recently posted "Terminating Tenure: Rejecting Tenure Contracts in Bankruptcy" to SSRN. Here is the abstract:

Many institutions of higher education are in dire financial straits and will close, merge, or file for bankruptcy in the near future. This Article considers the effect of bankruptcy laws on the ability of higher education institutions to restructure their workforces and, in particular, the impact that a bankruptcy filing may have on tenured professors. It also addresses how some tenured professors may be able to complicate their employer’s reorganization to their own strategic advantage.

In this excellent article, Bruckner considers how the crisis in legal education may affect the obligations of law schools facing bankruptcy to their tenured faculty, as well as how tenured faculty members at those institutions may respond to the threat of restructuring. Currently, colleges and universities are unusually vulnerable to financial crises, because they cannot be reorganized in bankruptcy. A bankrupt school loses accreditation and with it the ability to receive federal loan money, effectively a death sentence. But if Congress amends the Higher Education Act to allow schools to reorganize in bankruptcy, it will inevitably present a range of issues, including the bankruptcy treatment of tenure contracts. Bruckner argues that law schools can probably abrogate tenure contracts in bankruptcy, but observes that the bankruptcy process may enable tenured faculty members to delay or frustrate that abrogation in order to increase their leverage with the institution.

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