Law Commons^™

Better Than A Discharge, David G. Epstein, Tevin Bowens

Law Faculty Publications

"“It’s the Cadillac of . . .” Chilli Palmer. Traditionally, discharge has been regarded as the “Cadillac” of success in bankruptcy. Getting a discharge is as good as it can get.

When an individual debtor files for Chapter 7 or Chapter 13 and receives a discharge then, in the language of the South, the attorney for that individual has “done good.” Or, in more academic verbiage, the lawyer has achieved Chapter 7 and Chapter 13’s “end goal.” Similarly, if a business entity files for Chapter 11 and its plan is confirmed which triggers a discharge, the attorney for the business …

Changes To Bankruptcy Forms And Pending Bankruptcy Rule Changes, Kathleen Klepfer

Law Faculty Publications

Nearly every form used by the bankruptcy courts went through a significant overhaul in December as part of a seven-year project designed to streamline the filing process. The voluntary petition—old Form B1—has now been split into three separate forms: B101 for individual debtors, B201 for nonindividual debtors, and B401 for foreign proceedings. This overhaul altered the format of most additional forms and schedules, including the internal “director’s forms,” all of which are now available on the court’s main form page. Because most form numbers changed as well, the courts have provided a conversion chart that aligns the old and new …

Not Just Anna Nicole Smith: Cleavage In Bankruptcy, David G. Epstein

Law Faculty Publications

This is an essay about the unwarranted erosion of two basic bankruptcy principles:the cleavage effect of a debtor's filing of a bankruptcy petition and the equality of treatment of prepetition unsecured claims. These are two of the most fundamental bankruptcy concepts. First courts and then Congress have fashioned rules favoring the prepetition unsecured claims of vendors and lessors that are inconsistent with these concepts. We explore the origins of such favored treatment, question the commonly offered policy justifications, and argue that the prepetition unsecured claims of vendors and lessors generally should be afforded the same treatment in bankruptcy as other …

Randomness And Complexity In Social Explanation: Evidence From Finance And Bankruptcy Law, Bernard Trujillo

Law Faculty Publications

No abstract provided.

Bapcpa And Commercial Credit: Who (Sic) Do You Trust, David G. Epstein

Law Faculty Publications

Trying to understand and apply the many different provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) has caused people to yearn for the "good old days." At the National Conference of Bankruptcy Judges' (NCBJ) Annual Meeting in San Antonio in October 2005, there was a lot of talk about the "good old days" and some singing "'bout the good old days" at the NCBJ "Final Night Dinner" by a larger than life (at least as large as Sally Struthers), Wynonna Judd. And this has caused me to remember a daytime television show from my good …

Patterns In A Complex System: An Empirical Study Of Valuation In Business Bankruptcy Cases, Bernard Trujillo

Law Faculty Publications

This Article applies complex systems research methods to explore the characteristics of the bankruptcy legal system. It presents the results of an empirical study of twenty years of bankruptcy court valuation doctrine in business cramdown cases. The data provide solid descriptions of how courts exercise their discretion in valuing firms and assets.

This Article has two objectives: First, using scientific methodology, it explains the content of bankruptcy valuation doctrine. Second, the Article uses doctrine as a variable to explore the system dynamics that govern the processes of change over time.

Significant findings include: (1) Courts tend to split the difference …

Real-World And Academic Questions About Nonmonetary Obligations Under The 2005 Version Of 365(B), David G. Epstein

Law Faculty Publications

McLachlan, Countryman, Westbrook. More than most areas of bankruptcy law, the bankruptcy law of leases and contracts has been influenced by law professors. McLachlan is generally credited for inventing the bankruptcy law of leases and executory contracts; specifically, for drafting section 70(b) of the Bankruptcy Act-the predecessor of section 365. Countryman's law review articles based on work he did for the Commission to Study the Bankruptcy Laws of the United States led to the "Countryman definition" of "executory contracts." Additionally, Westbrook's article urging the elimination of the term "executory contract" and a clarification of the consequences of rejection shaped the …

Recoupment: Apples, Oranges And Fruit Basket Turnover, David G. Epstein

Law Faculty Publications

fiscal years and deducted the overpayment from its payments to H during that year. The fiscal year 2000 was also the year that H filed for Chapter 11. H filed an adversary proceeding against US contending that the deductions within four months before H's bankruptcy filing were voidable preferential transfers and that US's deductions after the bankruptcy filing were in violation of the automatic stay. The bankruptcy judge, the district court judge, and a unanimous appellate court panel looked to the law of recoupment to hold that US's reduction of payments was neither a preferential transfer nor a violation of …

Self-Organizing Legal Systems: Precedent And Variation In Bankruptcy, Bernard Trujillo

Law Faculty Publications

Models of legal ordering are frequently hierarchical. These models do not explain two prominent realities: (1) variation in the content of a legal system, and (2) patterns of non-hierarchical ordering that we observe. As a supplement to hierarchical explanations of legal order, this Article, drawing from physical and social science research on complex systems, offers a self-organizing model. The self-organizing model focuses on variation in the content of legal systems and attempts to explain the relationship between that variation and patterns of ordering. The self-organizing model demonstrates that variation and ordering are not opposite categories, but rather constitute one continuous …

Researching Bankruptcy Law On The Internet, Timothy L. Coggins

Law Faculty Publications

Attorneys researching bankruptcy law use a diverse collection of print resources to locate bankruptcy primary and secondary sources. Bankruptcy code provisions appear in Title 11 of the codified federal statutes, available either in the official U.S. Code (published by the U.S. Government Printing Office) or one of the two commercially published unofficial codes, U.S.C.A. (Thomson-West) and the U.S.C.S. (LexisNexis). Attorneys find bankruptcy rules and official forms (Rules 1-9036; Forms 1-35) in the same three sets. Researchers often find the unofficial codes preferable because they are annotated with case summaries and references to other materials and are supplemented more frequently than …

The Practical Scholar, David G. Epstein

Law Faculty Publications

Larry King was "the practical scholar" for bankruptcy. In 1992, Harry Edwards, a District of Columbia Court of Appeals judge who has been a lecturer at New York University Law School since 1989, provided a definition of "practical scholarship" that defines Larry's scholarship: "[I]t analyzes the law and the legal system with an aim to instruct attorneys in their consideration of legal problems; to guide judges and other decisionmakers in their resolution of legal disputes; and to advise legislators and other policymakers on law reform.

Another Way Of Thinking About Section 105(A) And Other Sources Of Supplemental Law Under The Bankruptcy Code, David G. Epstein

Law Faculty Publications

In this article we discuss the role of 105 in bankruptcy law generally rather than in specific bankruptcy cases. We mention a few cases as examples. Mainly, we aim at 105. We work toward an understanding of this section that explains our view of the bottom issue that determines the proper role and use of 105 and also the proper role and use of supplemental law generally.

Thin Red Line: An Analysis Of The Role Of Legal Assistants In The Chapter 13 Bankruptcy Process, David G. Epstein

Law Faculty Publications

The delegation by a lawyer of substantial amounts of non-ministerial functions to legal assistants raises various unauthorized practice of law issues. This Article provides an overview of the Chapter 13 bankruptcy process and state law rules regarding the unauthorized practice of law. We then discus~ these rules in the context of a typical Chapter 13 debtor practice.

Don't Go And Do Something Rash About Cram Down Interest Rates, David G. Epstein

Law Faculty Publications

This Article considers the second and different question of how to value the proposed payments under the plan. While the question of how to value the proposed payments under the plan is different from the question of how to value the creditor's security interest in property, there is a connection between the answers to the questions. The value of the payments must at least equal the value of the security interest.

The Wisconsin Exemption Clause Debate Of 1846: An Historical Perspective On The Regulation Of Debt, Bernard R. Trujillo

Law Faculty Publications

No abstract provided.

National Bankruptcy Review Commission's Section 365 Recommendations And The Larger Conceptual Issues, David G. Epstein

Law Faculty Publications

In the chapter of the Report of the National Bankruptcy Commission ("Report") entitled "Business Bankruptcy," the National Bankruptcy Review Commission ("Review Commission") makes four recommendations regarding section 365 of the Bankruptcy Code: 2.4.1 Clarifying the Meaning of "Rejection" The concept of "rejection" in section 365 should be replaced with "election to breach." Section 365 should provide that a trustee's ability to elect to breach a contract of the debtor is not an avoiding power. Section 502(g) should be amended to provide that a claim arising from the election to breach shall be allowed or disallowed the same as if such …

At The Intersection Of Bankruptcy And Divorce: Property Division Debts Under The Bankruptcy Reform Act Of 1994, Meredith J. Harbach

Law Faculty Publications

Bankruptcy has long had unique implications for divorce settlements and debts between ex-spouses. Historically, some marital debts owed from one ex-spouse to another were excepted from the traditional policy of "discharge. " Bankruptcy law distinguished between debts in the nature of alimony, maintenance, and support, which were protected from discharge, and property division debts, which were not. This distinction often had harsh consequences for creditor ex-spouses. Reeently, Congress enacted the Bankruptcy Reform Act of 1994, in part to ameliorate this problem. The amended Bankruptcy Code providP..s better protection for some property division debts. In this Note, Ms. Johnson argues that …

Resolving Still Unresolved Issues Of Bankruptcy Law: A Fence Or An Ambulance, David G. Epstein

Law Faculty Publications

Congress established a Bankruptcy Review Commission ("'Commission") when it enacted the Bankruptcy Reform Act of 1994. Although the Commission is empowered to review the Bankruptcy Code and make recommendations based upon its findings and conclusions, its focus is directed toward making suggestions that do not disturb the fundamental principles and balance of current law. Instead, the stated purposes of the Commission are: ( 1) to investigate and study issues and problems relating to title 11, United States Code (commonly known as the "'Bankruptcy Code"); (2) to evaluate the advisability of proposals and current arrangements with respect to such issues and …

Postpetition Lending Under Section 364: Current Issues - Incentives To Lenders To Provide Financing To Borrowers Who Are The Subject Of Bankruptcy Cases, David G. Epstein

Law Faculty Publications

A bankruptcy debtor is not viewed by most lenders as a desirable customer. Most lenders arc understandably reluctant to extend credit to such a borrower. This reluctance compounds the difficulties of a bankruptcy debtor. Without new financing, the cash needs of a debtor often will cause the debtor's assets to be liquidated, thereby foreclosing any hope of reorganization and defeating the rehabilitative purposes of the Bankruptcy Code. To counter the understandable reluctance of financial institutions to lend to bankruptcy debtors, section 364 of the Bankruptcy Code provides incentives to lenders to provide financing to borrowers who are the subject of …

Postpetition Lending Under Section 364: Issues Regarding The Gap Period And Financing For Prepackaged Plans, David G. Epstein

Law Faculty Publications

If the priorities provided by section 364(c) are insufficient to entice potential lenders to provide sufficient :financing to a Chapter 11 debtor, the debtor may, with the court's approval, obtain credit by granting the lender a lien on property of the debtor that is senior to existing liens on such property (a "priming lien"). The granting of such a priming lien, however, is subject to several statutory conditions. First, as with section 364(c), the debtor must prove that it cannot obtain credit on any less intrusive basis (i.e., through the use of section 364(a), (b), or (c)). Second, the debtor …

Foreward, David G. Epstein

Law Faculty Publications

The decision by the Board of Editors of the Mississippi College Law Review to publish a bankruptcy symposium issue is a timely one. In the boardrooms of American businesses and the kitchens of American families, more and more people are talking about bankruptcy; more and more people are deciding to file bankruptcy petitions. This increase in bankruptcy filings is in part attributable to world, national, and local economic changes, in part attributable to changes in business and society and in business and societal values, in part attributable to changes in the bankruptcy law.

Consequences Of Converting A Bankruptcy Case, David G. Epstein

Law Faculty Publications

This paper discusses some of the consequences of converting a bankruptcy case from one chapter to another. At present, there are four different forms of bankruptcy: chapter 7, chapter 9, chapter 11, chapter 13. Congress is currently considering creating yet a fifth form of bankruptcy for farmers. Most individual debtors are now eligible for relief under three of the chapters, 7, 11, or 13. Corporate and partnership debtors can now choose between chapter 7 and chapter 11. The various chapters of the Bankruptcy Code differ in both policy and particulars. A chapter 7 case involves liquidation of the "property of …

Chapters 11 And 13 Of The Bankruptcy Code--Observations On Using Case Authority From One Of The Chapters In Proceedings Under The Other, David G. Epstein

Law Faculty Publications

This Article will focus on the relationship between Chapter 11 and Chapter 13 of the Bankruptcy Code. A number of issues are similar or identical in Chapter 11 and Chapter 13. Furthermore, much of the language of Chapter 13 mirrors that of Chapter 11. This Article explores whether courts should apply case law and concepts of one chapter when similar issues arise in proceedings under the other chapter. Parts II and III of this Article address basic similarities and differences between Chapters 11 and 13. Parts IV, V, and VI examine three issues governed by statutory language common to both …

Discharges Under The New Bankruptcy Code, David G. Epstein

Law Faculty Publications

Prepared for the ALIABA Course of Study on Consumer Debtors and the Bankruptcy Code, September 24-25, 1981; revised by the author prior to publication in the Course Materials Journal.

Unless otherwise indicated, all section references are to the Bankruptcy Act of 1978, Title 11 of the United States Code ("Code"). "B.C.D." refers to the Bankruptcy Court Decisions; "B.R.," to West's Bankruptcy Reporter; "C.B.C.," to Collier's Bankruptcy Cases; and "UCC," to the Uniform Commercial Code.

Chapter 13: Its Operation, Its Statutory Requirements As To Payment To And Classification Of Unsecured Claims, And Its Advantages, David G. Epstein

Law Faculty Publications

This article will explore the operation of Chapter 13, the two major legal questions raised by the present Chapter 13, and the advantages of Chapter 13 over Chapter 7 and 11.

Bankruptcy Lien Invalidation: Role Of Recordation, David G. Epstein

Law Faculty Publications

Congress is currently considering new bankruptcy legislation. To date, its focus has been on two bills, one prepared by the National Commission on Bankruptcy Laws, the other by the National Conference of Bankruptcy Judges. Both bills call for substantial changes in present bankruptcy practices. Affirmative action on some combination of the two now seems likely. It appears that Congress soon will, for the first time in 77 years, comprehensively revise bankruptcy law. Accordingly, this is an appropriate time to examine closely basic bankruptcy concepts and policies. This article will deal with one very specific topic: the effect of recordation on …

Proceeding Under The Uniform Commercial Code, David G. Epstein

Law Faculty Publications

The Uniform Commercial Code is the "most important piece of business legislation ever prepared in the United States .... " "Article 9 is the most novel and probably the most important article in the Code." "The greatest change under the Code will probably come about in due time because of the so-called 'floating lien' "made possible in part by the Code's proceeds provision, section 9-306. The proceeds provision represents an innovation significant to both debtors and creditors. For example, in order to carry on his business, the borrower who avails himself of inventory financing often desires some right to dispose …