Bankruptcy Law Commons^™

Jurisdiction And Procedure Under The Bankruptcy Amendments Of 1984, Lawrence P. King

Vanderbilt Law Review

The complexity and possible invalidity of the 1984 amendments arise from Congress' refusal to constitute the bankruptcy courts as article III courts. The only group, if any, that this refusal has aided is the district court bench, by keeping their numbers small (except to the extent that additional bankruptcy duties re-quire additions to their numbers) and their status elite. The congressional action works against the needs of all parties involved in the functioning of the Bankruptcy Code and the judicial system itself. Debtors in Bankruptcy Code cases are left uncertain as to the authority of the bankruptcy courts adjudicating proceedings …

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, Christopher Fuller

Vanderbilt Law Review

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 chapters. …

The Concept Of A Voidable Preference In Bankruptcy, Vern Countryman

Vanderbilt Law Review

A bankruptcy trustee is armed by statute with a number of powers to avoid prebankruptcy transfers made by the now bankrupt debtor. Probably none of these powers is of more concern to prebankruptcy transferees than the trustee's power to avoid preferential transfers. This Article examines the content of and the reasons for the concept of a preferential transfer as it has evolved over the centuries.We inherited the notion of the preferential transfer from Eng-land; but, as elsewhere, we frequently have concluded that we could improve on the English model. Substantial differences exist,therefore, between the English law of voidable preferences and …

A Theory Of Contractual Debt Subordination And Lien Priority, David G. Carlson

Vanderbilt Law Review

Creditors distrust debtors and other creditors. Some of this in-security is dispelled by the two basic priority rules--"first in time"for secured credit and pro rata sharing for general credit. These priorities, however, are merely suppletive rules that replicate what most creditors want.' Individual creditors can have different objectives that call for different priorities. For that reason, creditors vary their rights by contract.'

Two motives exist for subordination agreements. First, a creditor may wish to subordinate its priority to induce another creditor to advance new funds. Second, a junior creditor may wish to advance credit, but the resulting increased leverage of …

The Undersecured Creditor In Reorganizations And The Nature Of Security, Theodore Eisenberg

Vanderbilt Law Review

For better or for worse, bankruptcy law generally recognizes secured creditors' state law rights in collateral. The decision to honor secured creditors' state law interests and the need to modify those interests in bankruptcy generate an essential tension of bankruptcy law. Much of the Bankruptcy Act's complexity and several of its most controversial provisions arise from congressional efforts to resolve this tension.

In trying to walk the fine line between taming and preserving secured creditors' rights, Congress created one of the most extraordinary provisions in the history of bankruptcy law. Section 1111(b) of the Bankruptcy Act of 19781 suspends two …

"Good Faith" And The Discharge Of Educational Loans In Chapter 13: Forging A Judicial Consensus, Jerome M. Organ

Vanderbilt Law Review

In the Bankruptcy Reform Act of 19781 Congress sought to accomplish many goals, some of which appear internally incompatible. For example, Congress enacted section 523(a)(8) to limit the dischargeability of educational loans in Chapter 7 liquidations. At the same time, however, Congress enacted the new Chapter 13 to encourage consumer debtors--including student borrowers--to elect repayment plans whenever feasible. Chapter 13 contains a"superdischarge" provision, which offers debtors a much broader discharge than the discharge that is available under section 523(a) in straight bankruptcy. While section 523(a)(8) excepts educational loans from discharge, section 1328(a) of Chapter 13 does not except them from …

Belly Up Down In The Dumps: Bankruptcy And Hazardous Waste Cleanup, Katherine S. Allen

Vanderbilt Law Review

In recent years, the critical risks of improper storage and disposal of hazardous and toxic substances have become frighteningly apparent,' and the regulation of hazardous waste disposal has become increasingly comprehensive and complex, on both the federal and state level. On the federal level, the Resource Conservation and Recovery Act (RCRA) and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, or the Super fund Act) together provide a comprehensive statutory and regulatory scheme designed to cleanup existing hazardous waste disposal sites and to prevent the growth of future dangerous sites. Other federal statutes address in a more general way …

Case Digest, Law Review Staff

Vanderbilt Journal of Transnational Law

Duress is Available Defense in Mitigation of Charges of Illegally Transporting Aliens into the United States--Pollgreen v. Morris slip op. No. 84-5217 (11th Cir. Sept. 17, 1985).

Foreign Debtor not Compelled to File for Ancillary Proceeding under Bankruptcy Code; Court may grant Comity to Pending Foreign Bankruptcy Proceeding--Cunard SteamshipCo. Ltd. v. Salen Reefer Services A.B., 773 F.2d 452 (2d Cir.1985).

Forum Selection Clause in Contract between Two Sovereigns is not Waiver of Right to Remove--Proyecfin de Venezuela v. Banco Industrial de Venezuela, 760 F.2d 390 (2d Cir.1985).

Fifth Circuit Overrides Admiralty Rule and Invokes Provisions of Arbitration Treaty--Sedco, Inc. v. …

The Tax Benefit Rule -- A Judicially Broadened Tool For Transactional Tax Equity, Jerry N. Smith

Vanderbilt Law Review

In light of the recent Supreme Court holding in United States v. Bliss Dairy, Inc.10 that the tax benefit rule requires income recognition by a corporation when it distributes previously expensed assets in complete liquidation, this Note assesses the dubious continued vitality of the tax benefit rule's single taxpayer construct-that is, the requirement that the same individual or entity serve as both the deducting and the recovering taxpayer. As the following analysis indicates, expansion of the tax benefit rule into a multiple taxpayer construct potentially requires some form of "recapture" in numerous factual settings previously considered non-taxable under existing nonrecognition …

The Continuing Puzzle Of Secured Debt, Alan Schwartz

Vanderbilt Law Review

In 1981, I wrote an article showing that no good answer had been given to the question why corporations issue some debt on a secured basis and other debt on an unsecured basis.' This showing had normative implications because claims that the institution of personal property security is efficient or otherwise desirable must be impeached if the actual purposes that security serves are unknown. Consequently, the law's favorable treatment of secured debt-for example, giving it first place in bankruptcy distributions--is without plausible support. My article did not advocate repealing the privileges attached to secured debt, however, because then--current knowledge also …

Efficiency Justifications For Personal Property Security, James J. White

Vanderbilt Law Review

It is always more interesting to challenge the received wisdom than to defend it. Yet in this case, a careful analysis of the facile assertions about the expansion of credit by the granting of security and about the other presumed efficiencies of security produces arguments and evidence that strengthen rather than weaken the efficiency arguments. In the first place, it appears that the granting of security does in fact expand the credit granted to risky debtors and thus that any efficiency equation must consider the probable benefits of such expansion. Second, a close examination of the actual experience not only …

Lifting The Cloud Of Uncertainty Over The Repo Market: Characterization Of Repos As Separate Purchases And Sales Of Securities, William F. Hagerty, Iv

Vanderbilt Law Review

In light of the actual and potential financial harm that repo investors faced after failures of several repo market participants,this Note proposes a new legal characterization of repos and argues for adoption of proposed Bankruptcy Code amendments pertaining to repos. Both of these suggestions would give repo investors significant future financial protection without destroying the financially attractive characteristics of repurchase agreements.

Part II of this Note begins laying the foundation for this proposal by discussing current repo market problems that the failures of several repoissiers have exposed.

Part II discusses new policies concerning the appropriate uses of the collateral securities …

Inflation And The Concept Of Reorganization Value, Elizabeth J. Schwartz

Vanderbilt Law Review

This Recent Development examines the validity of this formula, with and without allowances for future inflation, as a tool for valuing the stock to be distributed to creditors in corporate re-organization proceedings. This discussion considers the valuation method both under Chapter 11 of the new Bankruptcy Code and under Chapter X of the now superseded Bankruptcy Act, which is still effective in many pending cases. The Recent Development describes the purpose and effects of equity share valuations in bankruptcy reorganization proceedings, compares the methods that have been used by the courts with methods used by investors to ascertain the investment …

The Reclaiming Seller Under The Bankruptcy Reform Act: Resolution Or Renewal Of An Old Conflict?, Richard A. Mann, Michael J. Phillips

Vanderbilt Law Review

This Article will assess the impact of the Bankruptcy Reform Act upon the conflict of the Code cash and credit sellers with the trustee in bankruptcy. The article will begin by discussing the legal position of the reclaiming seller at common law, both because the new Act's interaction with the Code cannot be understood without reference to such doctrines, and because these doctrines are often likely to be of continued applicability under the new Act. It will then examine the seller's rights under the U.C.C., and will discuss his relations with certain bankruptcy-relevant Code third parties. Following this, the Article …

Section 337 Sales As Part Of Reorganizations, James H. Lokey, Jr.

Vanderbilt Law Review

This Note demonstrates that by applying the meaning of "complete liquidation" developed in several liquidation-reincorporation cases to the obviously distinguishable facts of FEC, the Court of Claims has adopted an unnecessarily restrictive view of section 337's "complete liquidation" requirement...

This Note has demonstrated that although the liquidation-reincorporation cases appear to support the traditional view that a "complete liquidation" cannot occur during a reorganization, when taken in context they are weak authority for the holding in FEC.

Recent Decisions, Kate Eyler, Margaret H. Young, B. Rowland Heyward, Gary I. Christian

Vanderbilt Journal of Transnational Law

Recent Decisions Immigration--Entry Resident Alien Who Makes Brief Visit Outside the Country is Deportable if He Reenters United States at an Unauthorized Location while Aiding Illegal Aliens to Enter

Kate Eyler

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International Banking--Bankruptcy--When Foreign Law Prohibits a Foreign Banking Corporation from Supplying Required Creditors List, Chapter XI Petition Should Not be Dismissed as Inherently Defective

Margaret Helen Young

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The instant case represents a change in long-standing ICC policy at once consistent with its statutory groundwork, yet with potentially drastic economic impact. In the final analysis, the issues were whether the subsequent legislation represented a congressional expression of its …

The Cost Of Realization By A Secured Creditor In Bankruptcy, J. Hobson Presley, Jr.

Vanderbilt Law Review

In October 1974, business failures increased by eighteen percent, reaching the highest level in any month since March 1971. The number of business failures for that month was the highest in eighty years.' As creditors seek to realize on their security interests, and encounter the problem of who should bear the expense incurred, they may discover that the term "secured" does not adequately describe the ability to recover advances made to the bankrupt debtor. Despite the confusing state of the law in this area, the increasingly inordinate expense of foreclosure in bankruptcy, and the pressures of the current economy, the …

Section 60c Of The Bankruptcy Act: Inadequate Protection For The Running Account Creditor, E. Hunter Taylor, Jr.

Vanderbilt Law Review

Although the unsecured creditor long has occupied a precarious position, the widespread passage of article 9 of the Uniform Commercial Code has created additional perils for him by making virtually all of his debtor's assets available to a secured lender.' The Bankruptcy Act, while not so one-sided, also contains snares and pitfalls for the unsecured creditor. One potential trap is contained in the seemingly straightforward declaration of section 60c... This article focuses upon, and proposes a means for the elimination of, the unnecessary paradoxes implicit in section 60c's treatment of an unsecured creditor who extends continuing credit to a debtor …

Case Comments--International Law--Corporations--State Denied Standing To Sue For Injury, Journal Staff

Vanderbilt Journal of Transnational Law

The Barcelona Traction, Light and Power Company, Ltd.,(hereinafter referred to as Barcelona Traction) was incorporated under Canadian law in 1911 with its main office in Toronto. Several subsidiaries were formed, all under Canadian law, to develop, produce, and distribute electric power in the vicinity of Catalonia, Spain. To finance these operations, the company issued both peseta and sterling bonds, the shares in some of the subsidiaries providing security to a Canadian bank for the sterling bonds. Revenue produced by the subsidiaries from their operations in Spain was used to service the bond interest. Servicing was suspended for the duration of …

The Priority Conflict Between A Purchase Money Security Interest And A Prior Security Interest In Future Accounts Receivable, Howell J. Reeves

Vanderbilt Law Review

Article 9 of the Uniform Commercial Code established an exhaustive scheme for the determination and control of security interest in personal property and fixtures' which is now the law of all but one of the states and the District of Columbia Not the least momentous of the provisions in Article 9 are those that govern priorities among conflicting security interests in the same collateral. The purpose of this inquiry is to examine the rules of priority that the U.C.C. provides for a conflict between the holder of a purchase money security interest in inventory and proceeds and a holder of …

Recent Cases, Law Review Staff

Vanderbilt Law Review

Bankruptcy--Transfers--Drawee Bank Not Liable for Payment of Depositor's Check After His Voluntary Petition in Bankruptcy Where Notice Is Not Given to Bank

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Constitutional Law--States Must Apply Federal Harmless--Error Standard to Federal Constitutional Error

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Juvenile Courts--Juveniles in Delinquency Proceedings Accorded Same Rights as Adults in Criminal Trials

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Taxation--Federal Income Taxation--Section 267 of the IRC Applies to Involuntary Sale

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Torts--Right of Privacy--Rule of New York Times v. Sullivan Extended to Actions for Invasion of Privacy

Bankruptcy As An Occasion For Restitutionary Claims, William F. Young Jr.

Vanderbilt Law Review

Whether we are concerned with claims against the estate or with voidable transfers, it is essential to note that the Bankruptcy Act makes the filing of a bankruptcy petition a decisive event: a transaction occurring after the filing is likely to have consequences far different from what would have ensued if it had occurred before. The date of filing is, indeed, one of the very meanings of the word "bankruptcy" as it appears in the act. This point of distinction must be observed in each part of the discussion that follows. In the main, Part II concerns restitutionary principles in …

Recent Cases, Law Review Staff

Vanderbilt Law Review

Antitrust--Robinson-Patman-Adoption of Physical Comparison Test To Determine "Like Grade or Quality"

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Antitrust--Tying Arrangement Held Unfair Method of Competition Under Section 5 of Federal Trade Commission Act Atlantic Refining Company agreed to promote

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Bankruptcy--Tax-Rights of a Trustee in Bankruptcy Against an Unrecorded Tax Lien

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Constitutional Law--Applicability of the Fourteenth Amendment to a Charitable Trust in Which a State Agency Was the Original Trustee

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Constitutional Law--Clandestine Surveillance of Public Toilet--Not an Unreasonable Search

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Criminal Law--Joint Trials--Admission of Confession Implicating Both Defendants Held Erroneous

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Evidence--No Cross-Examination of Defendant's Character Witnesses as to His Prior Arrests and Conviction …

Creditor's Rights And Security Transactions -- 1964 Tennessee Survey, Forrest W. Lacey

Vanderbilt Law Review

The Bankruptcy Act gives the trustee, as of the date of bankruptcy,the rights of a lien creditor whether or not such creditors actually exist." Yet, the rights of such a lien creditor and his status relative to other conflicting interests are determined by state law. Under Tennessee law encumbrances on automobiles, other than liens dependent on possession, must be noted on the certificate of title to be valid against creditors, purchasers or encumbrancers in the absence of actual knowledge.' In the instant case, although the encumbrance was noted on the bill of sale, it was not noted on the title …

William 0. Douglas -- His Work In Policing Bankruptcy Proceedings, John W. Hopkirk

Vanderbilt Law Review

William 0. Douglas, while associated with the Securities and Exchange Commission during the mid-nineteen thirties, was responsible for a study of methods and procedures of corporate reorganization. By examining this area of Douglas' work, we can compare the position on corporate reorganization which the Justice developed as an administrative official for the New Deal with his later consideration of the same problems as a member of the Supreme Court of the United States. Through this comparison we can observe a number of basic attitudes which were manifested by Douglas both before and since he has joined the Court. Important among …

A Survey Of The Fraudulent Conveyance In Bankruptcy, Paul J. Hartman

Vanderbilt Law Review

No debtor should be permitted to conceal or dispose of his property for the purpose of preventing his creditors from satisfying their legal claims. In ethical terms which have become classic, a debtor should be just to his creditors before he can rightfully be generous with his property for the benefit of others. The original and primary purpose of bankruptcy legislation has been, and continues to be, a just distribution of the bankrupt's property among his creditors.

To help effectuate the purpose of bankruptcy legislation, the fraudulent conveyance is of major importance in three distinct respects. In the first place, …

Federal Tax Liens In Bankruptcy, Pierre R. Loiseaux

Vanderbilt Law Review

In this article, the author considers the peculiarly preferred position of the tax lien under section 67 of the Bankruptcy Act. From his consideration of the position of the trustee and the claim of the government he concludes that the law as presently applied is inequitable. He advocates that the government's secret lien be held invalid against the trustee, that the inchoate lien doctrine should not be applied in bankruptcy, and that the doctrine of Moore v. Bay be modified.

Selected Materials On The Literature Of Bankruptcy, Roy Mersky

Vanderbilt Law Review

Charles Warren, in his book Bankruptcy in United States History, opens the first chapter with a statement that would discourage most lawyers interested in developing a practice in bankruptcy: "The subject of bankruptcy is gloomy and depressing in that the law of bankruptcy is dry and discouraging." However, a federal bankruptcy law has been on the statute books continuously since 1898, and it is safe to assume that barring a nuclear war, legal problems dealing with bankruptcy will continue for along time in the future.

Arrangements And Wage Earner Plans: Proceedings Under Chapters Xi And Xiii, Sydney Krause

Vanderbilt Law Review

In this article, Mr. Krause considers the practical problems confronting the attorney who conducts proceedings under chapters 11 and 13 of the Bankruptcy Act. The article is a revision of remarks made by Mr. Krause at the Institute on Debtor-Creditor Relations held at the Vanderbilt University School of Law on November 11, 1961. While a number of changes have been made in the remarks, the author has retained, insofar as possible, the original flavor of the address.

The Practitioner And The Bankruptcy Process, John M. Bates

Vanderbilt Law Review

While procedure in bankruptcy matters is not difficult it requires meticulous attention to detail. After observing many cases, it is my opinion that the average practitioner who carefully observes the rules of procedure and is painstaking and conscientious in drafting the schedules and other required pleadings can find bankruptcy an interesting and rewarding practice.