Law Commons^™

Going Concerns And Environmental Concerns: Mitigating Climate Change Through Bankruptcy Reform, Alexander Gouzoules

Faculty Publications

This article examines how legislative reforms to the Bankruptcy Code could mitigate the effects of climate change, speed the adoption of renewable energy, and contribute to U.S. compliance with the Paris Agreement of 2015. It analyzes the benefits derived by the fossil fuel industry from Chapter 11, which allows extractive firms to survive boom-and-bust cycles caused by volatile oil and gas prices. Insolvent polluters are preserved as going concerns during price collapses, only to resume and expand production as prices recover.

This article proposes novel legislative reforms to the Bankruptcy Code that would require insolvent fossil fuel producers to liquidate …

A No-Contest Discharge For Uncollectible Student Loans, Brook E. Gotberg, Matthew Bruckner, Dalie Jimenez, Chrystin Ondersma

Faculty Publications

Over forty-four million Americans owe more than $1.6 trillion in student loan debt. This debt is nearly impossible to discharge in bankruptcy. Attempting to do so may require costly and contentious litigation with the Department of Education. And because the Department typically fights every case, even initial success can be followed by years of appeals. As a result, few student loan borrowers attempt to discharge their student loan debt in bankruptcy.

In this Article, we call on the Department of Education to develop a set of ten easily ascertainable and verifiable circumstances in which it will not contest a debtor’s …

Relational Preferences In Chapter 11 Proceedings, Brook E. Gotberg

Faculty Publications

It is no secret that creditors hate so-called "preference" actions, which permit a debtor to recover payments made to creditors on the eve of bankruptcy for the benefit of the estate. Nominally, preference actions are intended to equalize the extent to which each unsecured creditor must bear the loss of a bankruptcy discharge, or to discourage creditors from rushing to collect from the debtor in such a way that will push an insolvent debtor into bankruptcy. But empirical evidence strongly suggests that, at least in chapter 11 reorganization proceedings, preference actions do not fulfill either of these stated goals. Interviews …

"Undue Hardship" And Uninsured Americans: How Access To Healthcare Should Impact Student-Loan Discharge In Bankruptcy, Alexander Gouzoules

Faculty Publications

Student-loan debt has grown to unprecedented heights. Contributing to the severe burden imposed by these debts is the Bankruptcy Code’s unique presumption that they are not dischargeable. To overcome that presumption, a debtor must establish that repayment of her loans would constitute an “undue hardship.” This essay examines the disagreement among bankruptcy courts that have interpreted the “undue hardship” standard in situations where a debtor is unable to afford health insurance—a common occurrence among the economically disadvantaged. After examining recent healthcare reforms, I argue that Congress has expressed a judgment that all Americans should obtain minimum essential healthcare. Though this …

The “Undue Hardship” Test: The Dangers Of A Subjective Test In Determining The Dischargeability Of Student Loan Debt In Bankruptcy, Rebekah Keller

Missouri Law Review

In today’s culture of living life on credit, post-secondary education loans have become the most popular method for American students to pay for their college degrees. Further, “[t]he costs for a higher education are among the fastest-rising costs in American culture today. Since 1980, tuition costs at U.S. colleges and universities have risen 757 percent.” With $1.2 trillion in current outstanding student loan debt, approximately 43 percent of the 22 million Americans with federal student loan debt are not making payments on their loans. In 2014, 69 percent of college seniors at public and nonprofit colleges graduated with some student …

The Eighth Circuit Allows A Child Tax Credit Exemption In Bankruptcy Proceedings: A Minty Fresh Start Or Abuse Of The System?, Rebekah Keller

Missouri Law Review

Part II of this Note examines the issues presented in the instant case, Hardy v. Fink, in which the Eighth Circuit became the first circuit court to include the Child Tax Credit as a “public assistance benefit” under the Missouri exemption statute in a bankruptcy proceeding. Part III explores the applicable laws, legislative history, and recent case law that addressed these issues. Part IV explores the Hardy decision’s in-depth examination of the legislative history surrounding the Child Tax Credit and the underlying purpose behind including public assistance benefits in both state and federal exemption schemes. Part V offers a framework …

Are They Or Aren’T They “Retirement Funds”? The Case For Including Funds From An Inherited Ira In A Debtor’S Bankruptcy Estate, Jennifer Salisbury

Missouri Law Review

This Note first discusses the subsequent history of Clark. Next, it discusses the legal history of both non-inherited and inherited IRAs leading up to the Clark decision. Then, it details the Court’s decision in Clark. Finally, it concludes with a comparison of state and federal exemption schemes, using Missouri as an example, calling for reform of Bankruptcy Code Section 522(b)(3).

Conflicting Preferences In Business Bankruptcy: The Need For Different Rules In Different Chapters, Brook E. Gotberg

Faculty Publications

The law of preferential transfers permits the trustee of a bankruptcy estate to avoid transfers made by the debtor to a creditor on account of a prior debt in the 90 days leading up to the bankruptcy proceeding. The standard for avoiding these preferential transfers is one of strict liability, on the rationale that preference actions exist to ensure that all general creditors of the bankruptcy estate recover the same proportional amount, regardless of the debtor's intent to favor any one creditor or the creditor's intent to be so favored. But preference law also permits certain exceptions to strict preference …

Bankrupting The Faith , Pamela Foohey

Missouri Law Review

This Article examines the institutions’ characteristics, reasons for filing, and case outcomes to investigate what benefits Chapter 11 brings to the organizations and whether bankruptcy is an effective solution to their financial problems. Based on the successful reorganizations and continued operations of some of the debtors in the study, it finds that Chapter 11 has the potential to provide a productive means for addressing their financial problems by offering religious organizations an avenue to rehabilitate their operations following economic downturns, failures and transitions in leadership, and standstills in negotiating with creditors. In exploring these Chapter 11 cases, this Article not …

Rethinking The Law Firm Organizational Form And Capitalization Structure , Edward S. Adams

Missouri Law Review

The goal of this Article is to examine the partnership model and advocate for a change in the Model Rules that would allow for public ownership of law firms, and to make disclosure of firm financials a mandatory requirement for all firms with over 100 lawyers. Part II explores the history and evolution of limited liability and law firm structures in the United States. Part III discusses incorporated law firms and MDPs and how they might benefit U.S. law firms. Part IV looks at the developments in the United Kingdom and Australia and the forces of globalization that have an …

Recoupment And Bankruptcy: How To Effectuate Bankruptcy Policy Through The Same Transaction Test , Jacob Thessen

Missouri Law Review

This Note will explore the interaction between recoupment and bankruptcy by focusing on the Eighth Circuit’s decision in In re Terry. Terry is significant because the Eighth Circuit allowed an insurance company to recoup pre-petition overpayments from the bankrupt debtor’s post-petition benefits. In doing so, the Eighth Circuit refused to acknowledge a separate balancing of the equities test, independent from the traditional same transaction requirement, when determining a creditor’s recoupment defense. This discussion will center on recoupment’s “same transaction” test and why it can be utilized to achieve sound bankruptcy policy by denying recoupment claims. It is this Note’s contention …

Restructuring The Bankruptcy System: A Strategic Response To Stern V. Marshall, Brook E. Gotberg

Faculty Publications

The Supreme Court's ruling in Stern v. Marshall has signaled a need to alter the bankruptcy courts' jurisdictional structure. In Stern, the Supreme Court ruled that bankruptcy judges, who lack the life tenure and salary protections provided by Article III, cannot issue final rulings in bankruptcy proceedings previously believed to be within their core jurisdiction. In response to the constitutional challenge raised by Stern, and in recognition that bankruptcy court's jurisdictional limits represent a long-standing problem, many argue for a long-term solution: the restructuring of the system to create specialized Article III bankruptcy courts. This article evaluates this proposal in …

From Stem To Stern: Navigating Bankruptcy Practice After Stern V. Marshall, Michelle Wright

Missouri Law Review

In order to provide a foundation for understanding the Court’s reasoning in Stern, Part II of this Comment briefly covers the history of bankruptcy in America. Section III explains how the Supreme Court of the United States’ holding in Stern v. Marshall16 has affected bankruptcy courts’ disposition of state law claims. Scholars’ interpretations of Stern range from understanding it as a narrow holding that will change little in bankruptcy, to questioning whether it foreshadows the Court holding the entire bankruptcy system is unconstitutional in a future case. Given the breadth of opinions that the decision supports, it is predictable that …

Do I Own This Car - The Supreme Court Creates A Standard For Bapcpa Car Ownership, Anne Benton Hucker

Missouri Law Review

The case was Ransom v. FIA Card Services, N.A., and the dispute was whether, under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), Appellant Jason Ransom should be able to claim a vehicle ownership expense for purposes of Chapter 13 bankruptcy for the unencumbered car that he owned. Practitioners in the bankruptcy field had been watching the progression of this case and were eager to learn the Court's resolution of the issue. The interest was due to two reasons. First, the outcome of the case would affect approximately 250,000 Chapter 13 petitioners. Second, the case would resolve …

A Reappraisal Of Attorneys' Fees In Bankruptcy, Michelle A. Cecil

Faculty Publications

This Article attempts to create a new method for approaching the priority of attorneys’ fees in bankruptcy. It criticizes Lamie for not going far enough toward resolving the attorneys’ fees issue, and proposes a statutory amendment to the Bankruptcy Code that will harmonize the interests of both creditors and debtors who are seeking bankruptcy protection during these difficult economic times.

Eighth Circuit Loosens The Grip Of The Bankruptcy Gag Rule, But Holds Attorneys To Advertising Disclosure Requirement, The, Bethany R. Findley

Missouri Law Review

The Court of Appeals for the Eighth Circuit, in a case of first impression, struck down a provision of the 2005 bankruptcy reform law that prohibits attorneys from advising their clients to incur more debt in contemplation of filing for bankruptcy. At the same time, the court upheld a provision of the Bankruptcy Code that compels attorneys to include a specified disclosure within their bankruptcy-related advertisements. The court's rationale for striking down the Code's restriction on attorney advice was that its broad application restricted attorneys from rendering advice that in some situations would be entirely lawful and beneficial to their …

Setting Things Straight: Adding A Provision To Allow Damages For Emotional Distress In The Bankruptcy Code Could Clear Up A Lot Of Confusion, Nathan M. Priestaf

Missouri Law Review

This Comment details the history of the automatic stay, the differing treatment of the statute in various jurisdictions, and the potential ramifications to debtors. Clearly, much of the time-consuming analysis performed by courts could be avoided if the Bankruptcy Code expressly permitted recovery for emotional distress, something most courts already permit, albeit only after considerable hand-wringing and strained reasoning. As a result, this Comment proposes a statutory addition to § 362(k) that addresses the dual concerns of bankruptcy courts: (1) allowing a legitimately injured debtor to recover for emotional distress damages while (2) providing a standard and burden of proof …

Hanging On To Till: Interpretations Of Bapcpa's Hanging Paragraph, Kaitlin A. Bridges

Missouri Law Review

Bankruptcy law has significantly changed in the last two years due to the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA"). An already complex and challenging area of law, bankruptcy has become even more so, as debtors and creditors begin to question how their rights have changed. For courts, one of the most perplexing issues is whether the standards and interpretations that were established in preBAPCPA bankruptcy cases are still applicable today. As courts have examined the potential effects of the new legislation, different opinions have emerged, leaving even more uncertainty for interested parties. One of the …

Our Federalism Changes Course: The Supreme Court Limits State Sovereign Immunity In Bankruptcy Actions, Benjamin C. Hassebrock

Missouri Law Review

Although sovereign immunity jurisprudence is not the most highly publicized topic of debate in the mainstream media, it has recently become a major source of contention on the Supreme Court. The flurry of sovereign immunity litigation that has reached the high court in the last decade has yielded mostly 5-4 decisions that have expanded the state's ability to assert immunity as a defense. Given this trend, few could have predicted the outcome of the court's decision in Central Virginia Community College v. Katz. In Katz, the 5-4 decision broke the other direction, and the court held that states had waived …

Bankruptcy Reform And The Costs Of Sickness: Exploring The Intersections, Melissa B. Jacoby

Missouri Law Review

Two important developments in the personal bankruptcy system unfolded over the course of the last several years: lawmakers considered and ultimately passed an omnibus bankruptcy bill, and researchers began to delve more broadly and deeply into medical-related financial distress among bankruptcy filers. Drawing on prior scholarship, this article contributes to this symposium by considering what, if anything, these developments have to do with one another. Part I briefly reviews two recent empirical studies of bankruptcy filers and the findings they produced. Although these findings may not have had discrete prescriptive implications for bankruptcy reform, they have contributed to a more …

Why The Bankruptcy Reform Act Left Labor Legacy Costs Alone, Daniel Keating

Missouri Law Review

This paper proceeds in four parts. Part I describes the world of labor legacy costs and how they end up intersecting with bankruptcy. Part II discusses what approaches Congress or the courts have already used to address the labor/bankruptcy intersection. Part III explores what Congress might have considered in the bankruptcy reform bill if it had been motivated to take a serious look at labor legacy costs in bankruptcy. Part IV explains possible theories as to why Congress chose not to reform the labor/bankruptcy intersection and why that decision was frustrating but prudent.

Bankruptcy Reform: What's Tax Got To Do With It, Michelle Arnopol Cecil

Missouri Law Review

On April 20, 2005, President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), the most sweeping bankruptcy reform legislation passed by Congress in over a quarter of a century. The bill, which spanned over 600 pages, completelyoverhauled the consumer bankruptcy system and made significant changes to business bankruptcies as well. Yet despite Congress's massive effort to improve the current bankruptcy system in BAPCPA, it failed to address a number of important issues in the area of bankruptcy taxation, a critical but often overlooked area of bankruptcy law. One such issue involves the tax …

Race Matters In Bankruptcy Reform, A. Mechele Dickerson

Missouri Law Review

On April 20, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of ("BAPCPA") was signed into law and became fully effective for cases filed on or after October 17, 2005. 4 After considering bankruptcy reform for almost a decade, Congress ultimately concluded that some debtors were abusing bankruptcy laws by, among other things, discharging debts they had the means to pay. To curb this perceived abuse, Congress decided to radically overhaul the consumer provisions of the Code by generally making it harder for an opportunistic or "Abusive Debtor" to discharge his debts. Given the sweeping nature of these changes, …

Potential And Peril Of Bapcpa For Empirical Research, The, Katherine Porter

Missouri Law Review

This article surveys the history of bankruptcy data and identifies the BAPCPA provisions that bear directly on research. It concludes by examining how such studies will and should proceed. BAPCPA provides both opportunities and hazards to advance our understanding of bankruptcy. The development of comprehensive federal data offers the potential to dramatically increase the scope of knowledge about the bankruptcy system. The peril lies in the government conducting its research without the transparency and accountability necessary to convince private industry, academic scholars, and the general public of the integrity and usefulness of these data. Rather than eclipsing academic research, the …

Future Of Bankruptcy: A Roundtable Discussion

Missouri Law Review

Moderator: Michelle Arnopol Cecil, William H. Pittman Professor of Law, University of Missouri-Columbia School of Law Participants: Marianne Culhane, Professor of Law, Creighton University School of Law A. Mechele Dickerson, Associate Dean for Academic Affairs and Fulbright and Jaworski Professor of Law, University of Texas School of Law The Honorable William Edmonds, Chief United States Bankruptcy Judge, Northern District of Iowa Daniel L. Keating, Associate Dean for Academic Affairs and Tyrrell Williams Professor of Law, Washington University School of Law Katherine Porter, Associate Professor of Law, University of Iowa College of Law John Pottow, Assistant Professor of Law, University of …

Foreword, Michelle Arnopol Cecil

Missouri Law Review

With the tumultuous period after the enactment of BAPCPA as our backdrop, hundreds of academics, practitioners, and judges gathered together for a two-day symposium to explore the positive and negative aspects of bankruptcy reform from a variety of interdisciplinary perspectives. This volume of the Missouri Law Review is devoted almost exclusively to that symposium. Not only does it include the ten participants' written scholarship that emerged from that extraordinary setting, during which we all benefitted tremendously from the input of others who had thought about, written about, and worked with the provisions of BAPCPA, but it also contains a fascinating …

Abuse Prevention 2005, James J. White

Missouri Law Review

The 2005 amendments to the Bankruptcy Code (BAPCPA or Act) that became effective in October of 2005 had an unusually long and difficult gestation. The legislation was conceived and even passed by Congress once during the Clinton administration. After President Clinton's pocket veto, the Act did not again reach a President's desk until President George W. Bush signed the Act into law on April 20, 2005, during the first year of his second term. The Act was conceived by institutional unsecured consumer creditors as the antidote to the rapidly rising number of consumer bankruptcies that followed the enactment of the …

Psychology And Bapcpa: Enhanced Disclosure And Emotion, Richard L. Wiener, Michael Holtje, Ryan J. Winter, Jason A. Cantone

Missouri Law Review

This article describes a program of research that applies social analytic jurisprudence to test some of the assumptions in consumer bankruptcy law and policy.4 Our work first seeks to describe selected provisions from the newly enacted bankruptcy amendments that pertain to enhanced disclosure requirements, and then to locate some of the behavioral assumptions implicit in these provisions. 5 Next, we assess the accuracy of these assumptions based on an experiment that we conducted looking at a simulated online shopping trip that we constructed specifically to test the effects of enhanced disclosure

Crystals, Mud, Bapcpa, And The Structure Of Bankruptcy Decisionmaking, R. Wilson Freyermuth

Missouri Law Review

As a real estate professor, I tend to focus on bankruptcy only as it intersects with mortgage law and Article 9 of the Uniform Commercial Code. Thus, I feel somewhat out of my element as a commenter in this symposium, and my observations may be suspect coming from a bankruptcy "outsider." But as an outside observer, it seems troublesome that bankruptcy's dispute resolution system - and particularly its multiple layers of appellate review - has always been so poorly designed to produce doctrinal clarity. And even if BAPCPA does resolve a number of specific legal issues that have bedeviled the …

Good In Theory, Bad In Practice: The Unintended Consequences Of Bapcpa's Credit Counseling Requirement, Katherine A. Jeter-Boldt

Missouri Law Review

On April 20, 2005, after nearly a decade of lobbying by the credit industry, President Bush signed the Bankruptcy Abuse and Consumer Protection Act (BAPCPA). The publicly stated goal of BAPCPA was to make bankruptcy less desirable so that debtors would stop abusing the protections of the Bankruptcy Code. Although Congress was motivated by laudable intentions, it is clear that BAPCPA contains at least one good idea that does not work in practice - the credit counseling requirement. Under BAPCPA, a debtor must receive credit counseling before filing for bankruptcy. Not only did Congress fail to instruct judges on the …