Bankruptcy Law Commons^™

A New Deal For Debtors: Providing Procedural Justice In Consumer Bankruptcy, Pamela Foohey

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Across the criminal and civil justice systems, research regarding procedural justice — feeling that one has a voice, is respected, and is before a neutral and even-handed adjudicator — shows that people’s positive perceptions of legal processes are fundamental to the legal system’s effectiveness and to the rule of law. About a million people file bankruptcy every year, making the consumer bankruptcy system the part of the federal court system with which people most often come into contact. Given the importance of bankruptcy to American families and the credit economy, there should exist a rich literature theorizing and investigating how …

Graying Of U.S. Bankruptcy: Fallout From Life In A Risk Society, Deborah Thorne, Pamela Foohey, Robert M. Lawless, Katherine Porter

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The social safety net for older Americans has been shrinking for the past couple decades. The risks associated with aging, reduced income, and increased healthcare costs, have been off-loaded onto older individuals. At the same time, older Americans are increasingly likely to file consumer bankruptcy, and their representation among those in bankruptcy has never been higher. Using data from the Consumer Bankruptcy Project, we find more than a two-fold increase in the rate at which older Americans (age 65 and over) file for bankruptcy and an almost five-fold increase in the percentage of older persons in the U.S. bankruptcy system. …

Access To Consumer Bankruptcy, Pamela Foohey

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This essay examines the state of access to justice in the context of consumer bankruptcy from two vantage points: (1) how people decide that their money problems are legal problems addressable by filing bankruptcy; and (2) the barriers people face in using the consumer bankruptcy system. To shed new light on how people decide to use bankruptcy to address their financial troubles, I analyze a sample of narratives accompanying consumers' complaints about financial products and services submitted to the Consumer Financial Protection Bureau. I also chronicle the evolution of research regarding consumer bankruptcy’s “local legal culture,” systemic racial bias, and …

Life In The Sweatbox, Pamela Foohey, Robert M. Lawless, Katherine Porter, Deborah Thorne

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The time before a person files bankruptcy is sometimes called the financial “sweatbox.” Using original data from the Consumer Bankruptcy Project, we find that people are living longer in the sweatbox before filing bankruptcy than they have in the past. We also describe the depletion of wealth and well-being that defines people’s time in the sweatbox. For those people who struggle for more than two years before filing bankruptcy — the “long strugglers” — their time in the sweatbox is particularly damaging. During their years in the sweatbox, long strugglers deal with persistent collection calls, go without healthcare, food, and …

Jevic's Promise: Procedural Justice In Chapter 11, Pamela Foohey

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In this Response to Jonathan Lipson's article, The Secret Life of Priority: Corporate Reorganization After Jevic, 93 Wash. L. Rev. 631 (2018)), I focus on Czyzewski v. Jevic Holding Corp.'s implications for procedural justice and corporate reorganization. In his article, Lipson explicitly links the chapter 11 process with the Bankruptcy Code’s substantive rules about priority, crafting a forceful argument about what procedural values the U.S. Supreme Court sought to uphold when it penned Jevic. In doing so, Lipson expounds on a broader truth about the co-option of corporate reorganization’s process in the name of value preservation. Procedural justice teaches that …

Consumer Credit In America: Past, Present, And Future (Introduction), Pamela Foohey, Jim Hawkins, Creola Johnson, Nathalie Martin

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In September 2016, in conjunction with Law & Contemporary Problems at Duke University School of Law, we organized a symposium on Consumer Credit in America. We sought to assess the state of consumer credit in America — to review and examine its recent history, to consider arguments for and against regulation, and to discuss the potential for future innovation. This is the introduction to the volume of articles coming out of that symposium.

Nine Into Eleven: Accounting For Common Interest Communities In Bankruptcy, C. Scott Pryor

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Ever more Americans live in a common interest community such as a homeowners’ association or condominium. Common interest communities restrict the uses owners may make of their property but provide benefits to the owners. The community association pays for these benefits by levying assessments on the owners’ property. Common interest communities offer a wide variety of benefits that can be divided into two sorts: public and private. Local municipalities typically provide public benefits at taxpayer expense; private entities usually afford private benefits at the consumer’s expense.

Like both public and private entities, common interest communities can experience the problem of …

'No Money Down' Bankruptcy, Pamela Foohey, Robert M. Lawless, Katherine Porter, Deborah Thorne

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This Article reports on a breakdown in access to justice in bankruptcy, a system from which one million Americans will seek help this year. A crucial decision for these consumers will be whether to file a chapter 7 or chapter 13 bankruptcy. Nearly every aspect of their bankruptcies — both the benefits and the burdens of debt relief — will be different in chapter 7 versus chapter 13. Almost all consumers will hire a bankruptcy attorney. Because they must pay their attorneys, many consumers will file chapter 13 to finance their access to the law, rather than because they prefer …

Lender Discrimination, Black Churches, And Bankruptcy, Pamela Foohey

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Based on my original empirical research, in this Article, I expose a disparity between the demographics of the roughly 650 religious congregations that have filed for chapter 11 bankruptcy during part of the last decade and congregations nationwide. Churches with predominately black membership — Black Churches — appeared in chapter 11 more than three times as often as they appear among churches across the country. A conservative estimate of the percentage of Black Churches among religious congregation chapter 11 debtors is 60%. The likely percentage is upward of 75%. Black Churches account for 21% of congregations nationwide.

Why are Black …

Chapter 11 Shapeshifters, Lindsey Simon

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Logic and equity would seem to demand that when administrative agencies are creditors to a bankrupt debtor, they should have the same status as other creditors. But a creditor agency retains its regulatory authority over the debtor, permitting it to continue with agency business such as conducting enforcement proceedings and awarding licenses. As a result, though bankruptcy law and policy both strongly support equal distribution of the estate, administrative agencies have been able to circumvent these goals through the use of “shapeshifting” behaviors. This Article evaluates two dangerous shapeshifting scenarios:

(1) where the agency avoids the limitations of creditor status …

When Faith Falls Short: Bankruptcy Decisions Of Churches, Pamela Foohey

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What does a church do when it is about to go bust? Religious organizations, like any business, can experience financial distress. Leaders could try to solve their churches’ financial problems on their own. Perhaps leaders do not view the problems as addressable with law. Or perhaps they do not think, as a moral or spiritual matter, that they should resort to the legal system, such as bankruptcy, to deal with their churches’ inability to pay its debts. Yet about ninety religious organizations seek to reorganize under the Bankruptcy Code every year. This Article relies on interviews with forty-five of these …

Secured Credit In Religious Institutions' Reorganizations, Pamela Foohey

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Scholars increasingly assume that most businesses enter Chapter 11 with a high percentage of secured debt, which leads to a high percentage of cases ending in the sale of the debtor’s assets under section 363 of the Bankruptcy Code rather than with confirmation of a reorganization plan. However, evidence and discussions about “the end of bankruptcy” center on secured creditors’ role in the reorganizations of very large corporations. The few analyses of cross-sections of Chapter 11 proceedings suggest that secured creditor control is not nearly as omnipresent as asserted and that 363 sales are not as dominant as assumed.

This …

When Churches Reorganize, Pamela Foohey

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This Article combines an analysis of documents submitted in connection with Chapter 11 cases filed by religious organizations with the results of in-depth interviews with these organizations’ leaders and their bankruptcy attorneys to assess whether reorganization has the potential to offer an effective solution to these debtors’ financial distress. In doing, it makes three contributions. First, it identifies a subset of organizations that seemed more likely to turn to bankruptcy: small congregationalist and non-denominational churches, often with predominately African-American membership. The Article pinpoints salient questions about these churches’ access to credit and use of bankruptcy for future study. Second, it …

Municipal Bankruptcy: When Doing Less Is Best, C. Scott Pryor

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No abstract provided.

Bankrupting The Faith, Pamela Foohey

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This Article presents the results of a comprehensive empirical study of religious organizations that filed bankruptcy under Chapter 11 from the beginning of 2006 to the end of 2011. It examines the institutions’ characteristics, reasons for filing, and case outcomes to investigate whether Chapter 11 is an effective solution to their financial problems. In investigating the religious organizations’ cases, the Article also assesses the role of bankruptcy courts in adjudicating Chapter 11 cases and places the cases within theories about the larger purposes of Chapter 11.

The study finds that the vast majority of debtors are small organizations that operate …

Chapter 11 Reorganization And The Fair And Equitable Standard: How The Absolute Priority Rule Applies To All Nonprofit Entities, Pamela Foohey

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In recent years, nonprofit entities increasingly have sought bankruptcy protection. Though the Bankruptcy Code does not prevent nonprofits from reorganizing, Chapter 11 was designed for and applies best to for-profit businesses. This creates challenges for courts evaluating a nonprofit’s reorganization plan. This Article focuses on one crucial aspect of a court’s evaluation — the fair and equitable standard, a necessary, but not sufficient condition of which is satisfaction of the absolute priority rule.

The few courts addressing absolute priority claims in nonprofit reorganizations have held that the rule is categorically inapplicable to nonprofit entities except in limited circumstances. These courts …

The Case For Value Billing In Chapter 11, Nancy B. Rapoport

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This article explores the forces contributing to very high professional fees in large Chapter 11 cases and suggests that lawyers might want to consider valuing their services in ways other than the traditional billable hour approach.

Through Gritted Teeth And Clenched Jaw: Court-Initiated Sanctions In Bankruptcy Opinions, Nancy B. Rapoport

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This article discusses what types of behavior can trigger a bankruptcy court's initiation of sanctions against an attorney.

Rethinking Professional Fees In Chapter 11 Cases, Nancy B. Rapoport

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This article discusses the many ways in which professional fees can spiral out of control in chapter 11 bankruptcy cases and evaluates the possible ways to monitor and control those fees.

(Almost) Everything We Learned About Pleasing Bankruptcy Judges, We Learned In Kindergarten, Nancy B. Rapoport, Roland Bernier Iii

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In this essay, we demonstrate that most ethics violations (at least the ones that irritate bankruptcy judges) are also violations of simple rules of behavior that people should have learned in kindergarten.

Bankruptcy Pro Bono Representation Of Consumers: The Seven Deadly Sins, Nancy B. Rapoport, Roland Bernier Iii

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This article attempts to walk the reader through the morass left by BAPCPA, using the seven deadly sins as its motif.

Lessons From The Nextwave Saga: The Federal Communications Commission, The Courts, And The Use Of Market Forms To Perform Public Functions, Rodger D. Citron, John A. Rogovin

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No abstract provided.

Enron And The New Disinterestedness - The Foxes Are Guarding The Henhouse, Nancy B. Rapoport

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Discussion of the 2005 amendments to the U.S. Bankruptcy Code as those changes relate to conflicts of interest of investment bankers.

Recent Developments In Bankruptcy Law, Nancy B. Rapoport

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Discussion of 2004 cases regarding bankruptcy law.

Secured Credit And Insolvency Law In Argentina And The U.S.: Gaining Insight From A Comparative Perspective, Guillermo A. Moglia Claps, Julian B. Mcdonnell

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It is not the purpose of this study to argue for or against changes in the secured credit or insolvency law of Argentina or the U.S. The perpetual clash of interested noted by James Madison and the contemporary pressures of the global economy are likely to assure that these areas of law will be subject to continuing scrutiny in both countries. Instead, we first urge that the law governing the creation and enforcement of security devices and the way in which insolvency laws impact these devices be considered together as part of one system of financing. The power which secured …

"Retail Choice" Is Coming: Have You Hugged Your Utilities Lawyer Today? (Part Ii), Nancy B. Rapoport, Jeffrey D. Van Niel

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This part of the article provides a discussion on the intersection of utilities law and bankruptcy law, pre-BAPCPA. (Part I provides a primer on the history of utilities regulation.)

"Retail Choice" Is Coming: Have You Hugged Your Utilities Lawyer Today? (Part I), Nancy B. Rapoport, Jeffrey D. Van Niel

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This part of the article provides a primer on the history of utilities regulation. (Part II provides a discussion on the intersection of utilities law and bankruptcy law, pre-BAPCPA.)

Multidisciplinary Practice After In Re Enron: Should The Debate On Mdp Change At All?, Nancy B. Rapoport

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No abstract provided.

Moral Bankruptcy: Modeling Appropriate Attorney Behavior In Bankruptcy Cases, Nancy B. Rapoport

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This essay discusses how important it is for lawyers, especially senior lawyers, to model appropriate behavior so that the newest lawyers learn how best to behave professionally.

Embracing Descent: The Bankruptcy Of A Business Paradigm For Conceptualizing And Regulating The Legal Profession, Jeffrey W. Stempel

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Lawyers are said to travel in packs, or at least pairs, and in the popular parlance are often compared to hoards of locusts, herds of cattle, or unruly mobs. However, at least for purposes of assessing concerns with professionalism currently surrounding the bar and the public, whether attorneys are more or less social than other human animals does not matter. My point is simply that lawyers are social beings; like other human beings in social and occupational groups, lawyers behave largely in accordance with group norms, in much the same way peer pressure led Julian English toward juvenile delinquency in …