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A Normative Theory Of Bankruptcy Law: Bankruptcy As (Is) Civil Procedure, Charles W. Mooney, Jr.

Washington and Lee Law Review

This paper develops a normative theory of bankruptcy law called "procedure theory." The core of procedure theory is that bankruptcy law exists in order to maximize the recoveries for holders of legal entitlements ("rightsholders") in respect of a financially distressed debtor. Bankruptcy law in the United States is a branch of civil procedure and the jurisdiction of federal courts. Procedure theory holds that it generally is wrong in bankruptcy to redistribute a debtor's wealth away from its rightsholders to benefit third-party interests, such as at-will employees and the general community. It also generally is wrong to rearrange priorities in bankruptcy …