The Case for a Bankruptcy Shareholder Ombudsman

When a publicly-traded company files for bankruptcy protection, its smallest investors — typically individual retail shareholders — may struggle to understand the nature of the proceedings and whether and to what extent they may participate in the case. Although shareholders increasingly come together and form ad hoc groups to defend their interests, these efforts are often expensive and highly inefficient, from both the shareholders’ perspective and from a case management perspective. This Article proposes a novel solution: a new, mandatory court-appointed shareholder ombudsman, modeled after both the patient care ombudsman that is typically appointed in health care bankruptcies and the consumer privacy ombudsman that is typically appointed in cases involving personally identifiable consumer information. After making the case for this new position, the balance of the Article provides the statutory text and related doctrine, commentary, and practical guidance necessary for Congress and the courts to implement this much-needed reform