The next article in this issue, Regulatory Bankruptcy, was written by Sarah Woo, a young NYU law professor who, tragically, passed away just prior to this publication. Woo joined the NYU Law faculty in June 2010. She was a specialist in financial regulation, corporate bankruptcy, and credit risk management. Sarah was an intelligent and creative scholar, a devoted and enthusiastic teacher, a warm and generous colleague, and a good friend. Her time with us was far too short.
A star undergraduate student at the National University of Singapore, Sarah graduated first in her class with an LL.B. She went on to work for several years in private practice, first in corporate finance law at Baker & McKenzie (Singapore) and White & Case (San Francisco), later in finance at Morgan Stanley (San Francisco and Shanghai) on the equity research team, and as an associate director at Moody’s KVM (New York and London). Sarah then earned a J.S.D. at Stanford Law School.
Few scholars are proficient in law, economic theory, and econometrics as well as knowledgeable about the institutions they study. Sarah was among those scholars, and in her brief academic career demonstrated mastery at combining her many strengths. Regulatory Bankruptcy is an example of such mastery. A riddle existed in the bankruptcy literature—secured lenders seemed to liquidate viable corporate debtors rather than profitably reorganize them. Bankruptcy law is premised on creditors’ incentives to salvage worthwhile debtors, so the secured creditors’ behavior was both puzzling and important to the law’s operation. Sarah recognized that the problem with prior analysis of this issue was an insufficiently nuanced understanding of the secured creditors themselves. They are banks which, she reasoned, are complex firms subject to both economic and regulatory stress. This stress, she hypothesized, may cause the secured creditors to take actions—including liquidation of their borrowers— that are not necessarily profit-maximizing. Sarah then tested this insight and found evidence to support her hypothesis. Regulatory Bankruptcy is thus a complete paper, rich in theory, practical information, and empirical analysis. It is a testament to Sarah’s skill and promise. It is also, sadly, a reminder of promise lost. We will miss her.
-Sarah’s Colleagues at NYU