Skeel debts dominion; a history of bankruptcy law in america (2001)

DEBT’S DOMINION DEBT’S DOMINION A HISTORY OF BANKRUPTCY LAW IN AMERICA DAVID A SKEEL, JR PRINCETON UNIVERSITY PRESS PRINCETON AND OXFORD Copyright © 2001 by Princeton University Press Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, Market Place, Woodstock, Oxfordshire OX20 1SY All Rights Reserved Library of Congress Cataloging-in-Publication Data Skeel, David A Jr 1961Debts dominion: a history of backruptcy law in America / David A Skeel, Jr Includes bibliographical references and index ISBN 0-691-08810-1 (CL : alk paper) Bankruptcy—United States—History Backruptcy—Political aspects— United States—History I Title KF1526 S59 2001 346.7307′8′9—dc21 2001021464 This book has been composed in Electra www.pup.princeton.edu Printed in the United States of America 10 For Sharon and for my parents CONTENTS PREFACE INTRODUCTION PART ONE: THE BIRTH OF U.S INSOLVENCY LAW CHAPTER ONE The Path to Permanence in 1898 CHAPTER TWO Railroad Receivership and the Elite Reorganization Bar PART TWO: THE GREAT DEPRESSION AND NEW DEAL CHAPTER THREE Escaping the New Deal: The Bankruptcy Bar in the 1930s CHAPTER FOUR William Douglas and the Rise of the Securities and Exchange Commission PART THREE: THE REVITALIZATION OF BANKRUPTCY CHAPTER FIVE Raising the Bar with the 1978 Bankruptcy Code CHAPTER SIX Repudiating the New Deal with Chapter 11 of the Bankruptcy Code PART FOUR: THE VIEW FROM THE TWENTY-FIRST CENTURY CHAPTER SEVEN Credit Cards and the Return of Ideology in Consumer Bankruptcy CHAPTER EIGHT Bankruptcy as a Business Address: The Growth of Chapter 11 in Practice and Theory EPILOGUE Globalization and U.S Bankruptcy Law NOTES INDEX PREFACE This book is the culmination of a scholarly and professional journey that began well over a decade ago, with a bankruptcy class I took in my nal year of law school Like most literature majors who wind up in law school, I knew little about business and nance, and even less about bankruptcy, when I arrived I signed up for the bankruptcy class only because of my admiration for the gifts of the professor who would be teaching it Despite this unenthusiastic beginning, I, like many of the other students in our very large class, found the travails of nancially troubled individuals and corporations riveting It also became clear that American bankruptcy law touches on all aspects of American life Within a few years, I found myself writing a law school paper on bankruptcy, practicing in a law rm’s bankruptcy department, and then continuing to pursue the interest in academia In those days (the mid 1980s), bankruptcy law had achieved a new prominence Although bankruptcy had previously been obscure and faintly unsavory, Congress had completely rewritten the bankruptcy laws only a few years before In that bankruptcy class, and among bankruptcy professionals, the new law (the “Code”) was portrayed in the most exalted of terms The Code was sweetness and light, and everything good, whereas the old law (the “Act”) had been archaic, cumbersome, and ine ective Bankruptcy practice, if not bankruptcy itself, had become almost “cool.” Shortly after I left law school, I learned that the history of American bankruptcy laws actually was more complicated (and even more interesting) than I had initially realized The old law may have been archaic and cumbersome, but it had a rather remarkable pedigree The last major reform had been passed by Congress during the Great Depression Many of its most important provisions had been drafted by William Douglas, who was appointed to the United States Supreme Court by President Roosevelt shortly thereafter, and went on to serve longer than any other justice in history (William Brennan described Douglas as one of the two geniuses he had known in his life.) Douglas had worked on the project with a variety of other prominent New Deal reformers In its own time, Douglas’s handiwork had itself been seen as a milestone in progressive, up-to-date legislation for resolving the age-old problem of financial distress The puzzle of how a law with such an impressive lineage came to seem so misguided was only the rst of many puzzles I encountered along the way The enigmas are hardly surprising, given the icting reactions bankruptcy has always evoked in Americans We think that honest but unfortunate debtors are entitled to a fresh start, but we also believe that debtors should repay their creditors if they can This tension, and others like it, has projected bankruptcy onto center stage in every generation of the nation’s history As this book goes to press, bankruptcy has once again captured lawmakers’ attention in Washington Congress is poised to pass the most signi cant bankruptcy reforms in over twenty years The legislation, much of which focuses on consumer bankruptcy, is designed to require more debtors to repay at least some of their debts Scarcely a day goes by without a major newspaper story either praising (because too many debtors take advantage of the system) or vilifying (because it’s simply a sop to heartless credit card companies) the proposed reforms At the same time, a souring economy has led to a spate of new, high-pro le corporate bankruptcies, ranging from TWA to Paci c Gas & Electric, one of California’s two major utilities The shock of nancial distress is not a new story, and it never grows old Like most books, this one has bene tted from the comments and suggestions of a wide range of individuals I am especially grateful to Douglas Baird and Howard Rosenthal, each of whom served as a referee for the book, and to Brad Hansen All three provided extensive written commentary on the entire book Steve Burbank, Eric Posner, and Bob Rasmussen also provided extremely helpful comments on the entire manuscript I received valuable comments on individual chapters of the manuscript from Patrick BoHon, Nicholas Georgakopoulos, Melissa Jacoby, Richard Levin, Chuck Mooney, Frank Partnoy, Joseph Pompykala, Tom Smith, Emerson Tiller, Todd Zywicki, Howard Rosenthal’s Politics and Finance class at Princeton University, and the participants at faculty workshops at Princeton University and the University of San Diego School of Law Michael Berman of the Securities and Exchange Commission was an invaluable source of information about the SEC’s role in bankruptcy; and Harvey Miller and Ron Trost provided helpful information about the 1978 Code and current bankruptcy practice I owe special thanks to Peter Dougherty, my editor at Princeton University Press, who was a constant source of encouragement and insight, from his email messages before the book was accepted for publication (telling me to “keep the faith”) to his editorial suggestions on the book Thanks also to Richard Isomaki for meticulous copyediting and to Bill Laznovsky for his work at the production stage Several libraries and librarians also proved invaluable during the course of the project I am especially grateful to Bill Draper of the Biddle Law Library of the University of Pennsylvania Law School Bill helped with the research, handled my sometimes onerous requests with unfailing good cheer, and provided a variety of helpful suggestions I also owe thanks to Ron Day of the Biddle Law Library, John Necci and Larry Reilly of the Temple University School of Law Library, and to the librarians of the Library of Congress As I worked on the book, I wrote a number of articles for legal periodicals that touched on the research in one way or another Although I wrote the book from scratch, some aspects of the analysis and occasional passages are drawn from the articles The editors of the following pieces have kindly permitted me to reprint passages from the articles: “Public Choice and the Future of Public Choice In uenced Legal Scholarship,” Vanderbilt Law Review 647 (1997); “The Genius of the 1898 Bankruptcy Act,” 15 Bankruptcy Developments Journal 321 (1999); “Vern Countryman and the Path of Progressive (and Populist) Bankruptcy Scholarship,” 113 Harvard Law Review 1075 (2000); and “What’s So Bad About Delaware,” 54 Vanderbilt Law Review (2001) I have cited several other articles in the relevant endnotes Finally, my biggest debt of all is to my family My wife Sharon has been a loving companion for thirteen years now, and has often put her own research on hold during the life of this project My parents have been a continual support from my earliest years And my sons, Carter and Stephen, are a continual blessing bankruptcy ring, 76–77, 133, 142, 146, 159 bankrupts See debtors banks: Bankruptcy Code (1978) and, 182–84; and bankruptcy law, 250n.46; vs nance companies, 85–86, 255n.23; See also investment banks Bartlett, Donald, 208 Basinger, Kim, Bebchuk, Lucian, 269n.25 Bending the Law (Sobol), 218 Benton, Thomas Hart, 28, 29 Berglof, Eric, 199, 246n.3, 250n.46 Berk, Gerald, 38, 60 Berle, Adolph, 109, 118 Biden, Joseph, 232 Black, Hugo, 230 Blank, Rome, Comisky & McCauley, 222 Blatchford, Samuel, 69 Bohacks, 166 bondholders: Chapter X protecting, 165; committee of, 58; as dissenters, 60; for reorganization, 62; in SEC report, 112; and voting provision, 121 Boyd Decree, 67–68 Bradley, Michael, 226 Brandeis, Louis D., 124, 245n.11–246n.11 Brandenburg, Edwin, 251n.58 Brennan, William, ix Broadman, Ellen, 193–94 Brookings Institution report, 12, 134, 142, 164, 246n.15 Bryan, William Jennings, 37 Buckley, Frank, 253n.40 Bulletin, 45, 75, 78; See also Commercial Law Journal Burdick, Quentin, Senator, 181 Burger, Warren, 140–41, 158 bust-and-boom pattern, 24, 247n.4 Calhoun, John, 26, 28, 40 Campeau, Robert, 214 Campeau Corporation, 214–15 Capital Paint and Varnish, 91 Carrere, Tia, Carruthers, Bruce, 13 Carter, James Earl (Jimmy), Jr., 19, 157, 158 Case v Los Angeles Lumber Products, 124–25, 166, 270n.39 Celler, Emanuel, Representative, 175 Chandler, Walter, Representative, 74, 87, 93, 97 Chandler Act (1938), 4, 18, 115, 119–23; and bankruptcy bar, 80, 131, 132–33; on bankruptcy referees, 96; e ects of, 125, 131–33, 161, 172–73, 176; enactment of, 124; and SEC, 74; trustees in, 119–20, 122, 256n.42; See also Chapter X; Chapter XI; Chapter XIII Chandler bill, 74, 87–88, 97, 114, 117, 259n.47 Chapter 7: vs Chapter 13, 154, 156; corporate debtors ling for, 9; court dismissal of, 196; fraud exception in, 155; individual debtors filing for, 6–7, Chapter 11: absolute priority rule in, 10, 181; automatic stay in, 10–11; and banks, 182–84; defenders of, 223–25; law-and-economics movement against, 225–27; and managers, 9, 181, 213; and takeovers, 215–17; trustees in, 10–11; voting on reorganization plans in, 9–10 Chapter 13, 7, 210–11; vs Chapter 7, 154, 156; means testing and, 154, 194, 196; superdischarge in, 155, 210 “Chapter 13 bribe,” 155–56 Chapter X, 240; absolute priority rule in, 124–25, 165; and bankruptcy judges, 169–70; vs Chapter XI, 162–68, 263n.2; decline in cases, 126t, 171, 172; loophole in, 162–64; mandatory trustee in, 119–20, 122 Chapter XI, 124, 162–68, 263n.2 Chapter XIII, 99, 133 Chicago, Milwaukee, St Paul & Pacific Railway Company (St Paul), 103 child support, 206–7 Civil War, 32 claims: allowable, 148; contingent, 148, 218; de nition of, 148, 217, 218; provable, 148; trading, 212; unliquidated, 148, 218 Clark, Samuel, 109 Clay, Henry, 23, 28, 29, 54, 248n.18 Clinton, Bill, 198, 203 Clinton, Hillary, 189, 199 co-debtor stay, 154 Code See Bankruptcy Code (1978) Coffee, John C., Jr., 268n.10 Coleman, Peter, 12 collective action problem, 268n.21–269n.21 collusive receivership, 64 Commerce Clause, 55, 251n.16 Commercial Law Journal, 76, 133; See also Bulletin Commercial Law League, 135; and exemption policy, 153; foundation of, 45; on solicitation, 134, 146; unsecured creditors represented by, 88 commissioners (under proposed Lowell bill), 40 Committee on Commercial Law (of ABA), 45; See also Bankruptcy Committee common pool problem, 268n.21–269n.21 Community Legal Services, 192, 193 Complete Bankruptcy, 29–33, 30t, 248n.20 composition (reorganization process), conservator, 113, 115, 116 Consolidated Rock Products v DuBois, 124, 166 Constitution: Bankruptcy Clause, 23, 27, 31, 52–54, 251n.16; Commerce Clause, 55, 251n.16 Consumer Bankruptcy Law and Practice, 193 consumer counseling, 207–8 Consumer Law Center, 156, 193 consumer protection movement, 135–36, 152, 192 Consumers Union, 193 Continental Airlines, 229 continental development, 60 contingent claim, 148, 218 “Contract with America,” 189, 199 Cooke, Jay, 51 corporate bankruptcy, 2, 8–11, 54; See also Chapter 7; Chapter 11; Chapter X; Chapter XI corporate receivership, 105, 106–7 corporate reorganization See reorganization corporate takeovers, 214–17 corruption (in early bankruptcy practice), 76–80 counsel, 76 counseling, 207–8 Countryman, Vern, 135, 136, 152, 155, 160, 175, 192, 194–95, 204, 222, 224, 266n.12 Cox, James, 264n.22 cramdown provision, 10 Cravath, Paul, 59, 66, 68–69, 102 Cravath, Swaine & Moore, 55, 63, 102, 132 credit card companies, 85, 189–91 credit card nondischargeability, 205–7 credit counseling, 207–8 Credit Monthly, 75, 78 “credit morality,” 191, 208 Credit Union National Association, 191 creditor groups: emergence of, 35–37, 36f; Henderson bill by, 43; in uence of, 37, 249n.39; Lowell bill by, 40–41 creditors: for administrative reform proposal, 91, 145; claims of, 148–49, 202–3; in uence of, 83–84, 85, 98; for involuntary bankruptcy, 42–43; junior, 10, 59, 226; lawyers of, 89; and means testing proposal, 204–5; against new value exception, 234; against reorganization, 61–62; and Republican party, 16, 39; secured, 6, 85–86; sen ior, 10, 59, 226; against state exemptions, 41–42; against trustees, 178; unsecured, 7, 9, 67–68, 83–85; voting on proposed reorganization plan, 9–10; vulnerability of, 84–85 creditors’ bargain theory, 200 creditor’s bill, 58 Creedon, John, 178 Crompton Company, 83 Cronon, William, 50 Cutler, Lloyd N., 263n.2 cycling, 28–34; multipeaked preferences and, 248n.20 Cyr, Conrad, 139, 143–44 Dallas Bar Association, 145 Davis, Polk & Wardwell, 102, 132 debt overhang, 59 debtors: vs bankrupts, 7, 98; choosing between rehabilitation plan and discharge, 1–2; corporate See corporate bankruptcy; credit counseling for, 207–8; and Democratic party, 16, 39; enhancing fresh start of, 154–57; estate of, 148; individual See personal bankruptcy; in uencing legislative process, 81–82, 98–99; lawyers of, 88–89; preferential transfers by, 11, 36, 64–65; See also prodebtor forces Debtors and Creditors in America (Coleman), 12 Delaware corporate bar, 68 Delaware venue, 216, 229–32, 269n.31–270n.31 Democratic party: in control of Congress, 157; and means testing proposal, 196–97; and New Deal, 119; in nineteenth century, 23–24; as prodebtor force, 16, 39 Denson, William, Congressman, 39 discharge, 1; definition of, 6; William Douglas on, 80; exceptions to, 6; immediate, 7; vs rehabilitation, 1–2, 98–99, 133, 154–57; in Thacher report, 79; See also Chapter divide-and-conquer strategy, 258n.20 Dodd, E Merrick, 108 Donovan, William, 73, 77, 78, 91 Donovan report, 74, 77–80, 98 Douglas, Paul, 192 Douglas, William, ix, 4, 15, 18, 19, 74, 79–80, 97, 102–3, 108, 109–13, 115, 117–18, 121, 122–23, 124–25, 135, 161, 164, 166–68, 170, 172, 180, 201, 213, 222, 223, 240, 270n.39 Dow Corning, 20, 218 Drew, Daniel, 50–51 Dulles, John Foster, 110 Eastern Airlines, 229 Edwards, Don, Representative, 140, 175 Eisenhower, Dwight D., 170–71 Emerson, Ralph Waldo, 25 England: Bankruptcy Act (1869), 36, 37–38, 90; Bankruptcy Act (1883), 38; bankruptcy law in, 2, 43, 90 Equity bill (Ingall’s bill), 250n.52 equity receivership, 4, 17, 48, 52, 53t, 57–69; ancillary, 104, 105, 107; codifying, 105–6; collusive, 64; corporate, 105, 106–7; cost of, 104; friendly, 64–67; investigation of, 110–13 Erie Rail Road, 50–51 Ernst, Irving, 117 Europe: bankruptcy in, 216–17, 241–43; See also specific countries exceptions: to discharge, 6; fraud, in Chapter 7, 155; new value, 233–35 “exclusivity period,” exempt property: federal control of, 8, 42, 152–54, 262n.32–263n.32; reform proposal for, 209, 267n.29; state control of, 7–8, 41–42, 151–54, 208–9 Failure and Forgiveness (Gross), 246n.17 Farnan, Joseph J., 230 federal bankruptcy legislation: and party politics, 26; and railroads, 52–55, 65 federal exemptions, 8, 42, 152–54, 262n.32–263n.32 Federalists, 3, 26 Federated Department Stores, 214–15, 216 Feidler, Robert, 181 “fixed principle,” 67 Florida state exemptions, 41 foreclosure bill, 57–58 Forman, Leon, 222 Fortas, Abe, 110, 111, 113, 115, 116, 259n.47 Fortington, Harold A., 111 The Fragile Middle Class (Warren, Westbrook, and Sullivan), 13, 195, 242–43 Francis Stetson, 68, 69, 102 Frank, Jerome, 58, 110, 122–23 Frankfurter, Felix, 103, 123, 167 fraud exception, in Chapter 7, 155 free rider problem, 80 Friendly, Henry, Judge, 165 Gallagher, Harold, 106 Gardbaum, Steven, 263n.32 garnishment, 152 Garrison, Lloyd, 79 General Motors, 135 General Stores Corp v Shlensky, 164, 166–67 Gerdes, John, 97, 116, 117 Germany: bankruptcy procedures in, 215, 217, 241–42; tax reform in, 241 Gingrich, Newt, 189, 199 Girth, Margaret, 134, 142 Glass-Steagall Act, 18, 108, 123–24, 215 globalization, 240–42 gold standard, 39 Gordon, John Steele, 49–50 Gordon, Robert, 253n.43 Gould, Jay, 50, 64 Grange (agrarian movement), 38 Granger laws, 51, 55 Great Depression, 16, 73, 84; See also New Deal reforms Groom, Littleton, 257n.15 Gross, Karen, 208, 246n.17 Halliday, Terence, 13 Hamilton, Alexander, Hansen, Bradley, 35, 253n.36 Hardin, Russell, 255n.18 Harkin v Brundage, 105, 257n.11 Harrison, William Henry, 32 Hart, Oliver, 269n.25 Hastings, Daniel, 74, 80, 106 Hastings-Michener bill, 74, 80, 90, 91, 96 Henderson, David, Representative, 32–33, 43 Henderson, Edward, 102 Henderson bill, 37, 43 A History of the Bankruptcy Clause of the Constitution of the United States of America (Noel), 245n.11 Hoar, George, Senator, 41, 54 Hoover, Herbert, 73, 105–6 Hornblower, Miller, Miller & Boston, 106 House Bill 8200, 140 Hunt, Reuben, 75, 95, 117 ICC See Interstate Commerce Commission immediate discharge, Impossibility Theorem (Arrow’s Theorem), 30, 248n.19 Ingalls, John, Senator, 41 Ingall’s bill, 250n.52 insolvency law, vs bankruptcy law, 27, 247n.14 institutional shareholders, 215 insurance companies, 153 interest groups, 14–15; See also specific groups international insolvency cases, 235–36 Interstate Commerce Act (1885), 51 Interstate Commerce Commission (ICC), 51, 106 Investment Bankers Association of America, 117 investment banks: Chandler Act and, 125; emergence of, 49; informational advantage o f , 120; investigation of, 110–13; against Lea bill, 117; underwriting mortgage bonds, 52, 58, 63–69; against voting prohibition, 121–22 The Investor Pays (Lowenthal), 245n.11, 257n.4 involuntary bankruptcy, 8, 32, 42–43 “Irrelevance Thesis,” 173 Irving Trust, 78 J P Morgan, 17, 65, 66, 69, 112, 120, 122, 123, 124, 172, 183, 216, 253n.41 Jackson, Thomas, 12–13, 200, 201, 222, 224, 225 Japan, bankruptcy procedures in, 215, 241, 242, 243 Japonica Partners, 216 Jefferson, Thomas, 3, 23 Jeffersonian Republicans, 3, 26 Jewish lawyers, 76, 134 Johns Manville, 9, 20, 217, 218, 219, 220 Johnson, Andrew, 42 Jones, Edith, 198, 268n.10 judges See bankruptcy judges judicial sale, 57 Judiciary Committee, 174–75, 181; and Chandler bill, 87; and Hastings-Michener bill, 74, 90; and NBC, 135; in nineteenth century, 31, 33; partisanship in, 203 junior creditors, 10, 59, 226 Kalman, Laura, 259n.47 Kalt, Joseph, 81 Kefauver, Estes, 135 Kennedy, Frank, 16, 93, 135, 139, 144, 175, 201, 261n.10, 263n.33 Kennedy, Joseph, 109, 115 King, Larry, 16, 144, 160, 163, 178–79, 201, 261n.10 King, William, Senator, 119 Klee, Ken, 156, 221, 262n.29 Kool and the Gang (musical group), Krehbiel, Keith, 265n.23 Kreuger and Toll, 110 Kroszner, Randy, 258n.35–259n.35 Kuhn, Bowie, 41 Kuhn, Loeb, 63, 65, 69, 120, 122, 123, 216 La Follette, Robert, 99 Landis, James, 109 Lasch, Christopher, 157 law-and-economics movement, 12–13, 199–201, 213, 224–28 law professors, 194–95 lawyers: bankruptcy See bankruptcy lawyers; trial, 220 Lea, Clarence, 114 Lea bill, 114–18, 173–74, 259n.39, 259n.47 Lee, Joe, 139 Legislative Leviathan: Party Leadership in the House (Cox and McCubbins), 264n.22 leveraged buyout, 214 Levin, Harris, 162 Levy, Aaron, 180–81 liquidation, 2; straight, 6–7; See also Chapter The Logic and Limits of Bankruptcy (Jackson), 12–13 logrolling, 31, 248n.19 Long, Huey, 92, 107 Long Bell Lumber Company, 81, 107 LoPucki, Lynn, 213, 267n.1, 269n.26 Lowell, John, 36 Lowell bill, 36, 37, 40–41, 90 Lowenthal, Max, 103, 122, 245n.11, 257n.4 Macy’s, 214–15, 216 Madison, James, 23 Magaziner, Ira, 199 managers: controlling bankruptcy process, 2, 8–9, 64–65; in uence of, 178, 265n.32; for reorganization, 61; of takeover targets, 215 mandatory trustee, 119–20, 177–78 Marsh, Harold, 139, 146, 171, 179 Marshall, John, 27 Marshall, William J., 264n.23 Martin, Albro, 62 “mass tort” cases, 217–21, 268n.10 Maxwell Communications, 235 McCubbins, Matthew D., 264n.22 McKeown, Tom, Representative, 107 McKinley, William, 37 McLain, Chester, 102, 103 McLaughlin, James, 76, 88, 95, 96, 98, 135, 256n.37 means testing, 154, 194, 196, 204–5, 210 memorials, 37 mergers, 214–17 Metzenbaum, Howard, 196, 197, 266n.16 Michener, Earl, Congressman, 74, 80 Miller, Frank & Miller, 193 Miller, Harvey, 134, 221, 222 Miller, Merton, 173 minimalist administrative structure, 40, 90 Modigliani, Franco, 173 “money or money’s worth,” 234, 270n.39 Montgomery, Randolph, 75, 76, 88, 91 Moore, John, 269n.25 Morgan, J P., 17, 65, 66, 69, 112, 120, 122, 123, 124, 172, 183, 216, 253n.41 mortgage bonds, 51–52, 54, 63 multinational insolvency cases, 235–36 multipeaked preferences, 248n.20 Munroe Railroad and Banking Company, 57, 61 Murphy, Eddie, NACM See National Association of Credit Men Nader, Ralph, 135, 192 Nadler, Charles, 133–34 National Association of Bankruptcy Judges, 139–40, 143 National Association of Consumer Bankruptcy Attorneys, 192 National Association of Credit Men (NACM), 75, 78, 83, 88, 91, 92 National Association of Federal Practitioners, 91 National Association of Referees in Bankruptcy, 86–87 National Bankruptcy Conference (NBC): and bankruptcy agency proposal, 144–45; and Bankruptcy Code (1978), 18–19; and Chandler bill, 87, 97; and Chapter XI, 167; and election of trustees proposal, 146; and exemption policy, 153, 262n.32–263n.32; foundation of, 74, 75, 95; members of, 96, 134, 160, 195; mission of, 149–50; for presumptive trustees, 177; and SEC, 74, 97, 116–17, 118, 265n.27; sympathy for debtors, 156 National Bankruptcy Review Commission, 19, 139–40, 143, 175 National Conference of Bankruptcy Judges, 194 National Consumer Finance Association, 154, 155, 191 National Consumer Law Center, 136, 192 National Law Journal, 221 National Organization of Members of Commercial Bodies, 36 National Retail Grocers Association, 84 NBC See National Bankruptcy Conference Nelson bill, 37, 43, 249n.27 Nesbit, Valentine, 99 New Deal reforms, 18; administrative reform proposals, 89–93; Glass-Steagall Act, 18, 108, 123–24, 215; reorganization bar supporting, 101, 103–6; Securities Act (1933), 107, 114, 118; Securities Exchange Act (1934), 97, 107, 108; See also Chandler Act (1938) new value exception, 233–35 New York, City of, Association of the Bar of, 77 Niskanen, William, 251n.59 Nixon, Richard, 139 no-asset bankruptcy cases, 7, 8, 142 No Bankruptcy, 29–33, 30t, 248n.20 Noel, F Regis, 245n.11 nondischargeable credit card debt, 205–7 North, Douglass, 240, 243 Northern Pacific Railway, 67 Northern Pacific v Boyd, 66–68 Northern Pipeline Construction Corporation v Marathon Pipeline Co., 158 Norway, bankruptcy in, 238, 243 Olmstead, James, 250n.55 Olson, Mancur, 249n.39, 255n.18 Other Peoples Money (Brandeis), 246n.11 Paine, Dalbert, 32 Panic of 1837, 25 Panic of 1857, 25, 51 Paramount Pictures, 111 Parker, Joel, 25 Penn Central, 212 Pennzoil, personal bankruptcy, 6–8; increase in, 136, 137t, 187, 188t, 190, 266n.3; in U.S vs in England, 2; See also Chapter 7; Chapter 13; Chapter XIII Pinckney, Charles, 23 plenary, 147–48 populism, 3, 38–39, 98–99 Posner, Eric, 13, 152, 177 Posner, Richard, 199 preemptive bill, 115 preferential transfers, 11, 36, 64–65 prepackaged bankruptcy, 228–29, 232 price shocks, 16 procreditor forces: law-and-economics movement as, 12–13, 199–201, 213, 224–28; Republican party as, 16, 39; See also creditor groups prodebtor forces: in 1800s, 38–39, 40, 43; in 1970s, 157; in 1980s, 191–97; Democratic party as, 16, 39; populism, 3, 38–39, 98–99, 107; for women, 203 Progressive movement, 79, 223–25 property, exempt See exempt property protective committee, 58, 120 provable claim, 148 public choice analysis, 14–15, 80, 246n.20 Purdue Study, 190, 195 railroads, 4, 239; competition among, 50–51; effects of, 49–50; failure of, 51–52; growth o f , 48–49; legislative obstacles to saving, 52–56; reorganization of See equity receivership Rasmussen, Robert, 229, 269n.25, 270n.31 “Rat Choice,” 200 rational apathy, 80 reaffirmation, 156 Reagan, Ronald, 192, 193, 196 receivership See equity receivership receivership bar See reorganization bar receivership certificate, 59–60 rehabilitation plan, 7, 8; vs discharge, 1–2, 98–99, 133, 154–57; See also Chapter 13; Chapter XIII Rehnquist, William, 198 Remington, Frank, 45–46, 75 Remington, Harold, 106 reorganization, 2; codifying, 105–9; investigation of, 114; opponents of, 61–62; provision permitting (1874), 54; of railroads See equity receivership; supporters of, 61; voluntary, 64; See also Chapter 11; Chapter X; Chapter XI reorganization bar: vs bankruptcy bar, 69–70, 73; Chandler Act and, 125, 132; investigation of, 110–13; for New Deal reforms, 101, 103–6 reorganization committee, 59 repayers, 82–83, 89 repayment See rehabilitation plan Republican party: and Bankruptcy Act (1867), 32; and Bankruptcy Act (1898), 43–44; in control of Congress, 43–44, 189, 199, 202; in nineteenth century, 23–24; as procreditor force, 16, 39 Rescuing Business (Carruthers and Halliday), 13 Reynolds, Burt, The Rise and Decline of Nations (Olson), 249n.39 Robins, A H., 20, 217–18 Rodgers, Churchill, 257n.15 Roe, Mark, 15 roll call voting, 199 Romano, Roberta, 265n.32 Roosevelt, Franklin, 107, 117, 201 Roosevelt, Theodore, 37, 44, 79 Rosen, Leonard, 221 Rosenthal, Howard, 199, 246n.3, 250n.46 Rosenzweig, Michael, 226 Rostow, Eugene V., 263n.2 Sabath, Adolf, 113 Sabath bill, 113–14, 115–16, 259n.38, 259n.47 Schroeder, Gerhard, 241 Schwartz, Alan, 227, 269n.26 Schwartz, Harry, 91 scope-expanding proposal, 141, 147–51 SEC See Securities and Exchange Commission SEC v Canandaigua Enterprises, 165, 264n.8 SEC v United States Realty & Improvement Co., 163 Section 77, 106, 257n.15 Section 77B, 107, 163 secured creditors, 6; influencing legislative process, 85–86; vs unsecured creditors, 85 Securities Act (1933), 107, 114, 118 Securities and Exchange Commission (SEC): demise of, 19, 168–73; and interest groups, 168–70, 176–82; and Judiciary Committee, 175; lawsuits by, 163, 165, 264n.8; and NBC, 74, 97, 116–17, 118, 265n.27; report by, 109–13, 115–16, 223; role of, 118, 122, 260n.49 Securities Exchange Act (1934), 97, 107, 108 Seligman, Joel, 171 Seligson, Charles, 160, 162, 168, 175, 222 Seligson, Morris & Newburger, 222 senior creditors, 10, 59, 226 setoff rights, 98, 183 Seward, William, 69 Shapiro, Ray, 222 Shapiro v Wilgus, 105, 257n.11 shareholders: and Chapter XI, 165; institutional, 215; for reorganization, 61; retaining interest in firm, 233; voting on proposed reorganization plan, 9–10 Shepsle, Kenneth, 248n.22, 265n.23 Shuchman, Phillip, 195 Simpson, Nicole Brown, Simpson, O J., 6, 245n.6 Skeel, David A., Jr., 248n.19, 249n.40, 255n.17, 269n.31–270n.31 Sobol, Richard, 218 social choice, 14 Sogo, 242 Sommer, Henry, 189, 192–93, 196 St Louis and San Francisco Railroad, 67 St Paul receivership, 103, 245n.11 Stanley, David, 134, 142 state exemptions, 7–8, 41–42, 151–54, 208–9 state insolvency laws: in absence of federal bankruptcy law, 23, 25; book on, 12; in Delaware, 216, 229–32, 269n.31–270n.31; and railroads, 55–56, 65 stay waiver See automatic stay Steele, James, 208 Stetson, Francis, 68, 69, 102 Stewart, William, Senator, 3, 39 stock cancellation scheme, 226 Story, Joseph, 28 straight liquidation, 6–7 student loans, Sturges v Crowninshield, 247n.14 Stutman, Triester and Glatt, 168 “substantial abuse” provision, 196–97, 204, 210 Sullivan & Cromwell, 102 Sullivan, Theresa, 13, 195, 242 summary, 147–48 Sunderland, Edwin, 97, 117 superdischarge, 155, 210 supervisors, 40 suppliers, 59–60 Swaine, Henry, 64–65 Swaine, Robert, 55, 67, 102–3, 104–5, 110, 111, 120 Synar, Michael, 198 Taggart, Walter, 212 takeovers, 214–17 Taylor, James, Teitelbaum, David, 117 territorialism, 235 Texaco, Texas state exemptions, 41 Thacher, Thomas, 77 Thacher report, 74, 77–80, 98, 103 Thomas, Randall, 229, 270n.31 Thurmond, Strom, 158, 196 Torrey, Jay, 15, 37, 239 Torrey bill, 37, 250n.53 tort cases, 217–21, 268n.10 “tort debentures,” 219 Tracht, Marshall E., 269n.27 transition costs, 84 trial lawyers, 220 Triester, George, 15, 136, 138, 144, 148, 160, 162, 168, 178 Trost, Ronald, 134, 140, 179, 221 trust fund, 217–18 Trust Indenture Act (1939), 101, 117, 118, 121, 260n.49, 260n.54 trust indentures, 121 trustees: authority of, 87, 94, 119–20, 122; avoidance powers of, 11, 256n.39; in Bankruptcy Code (1978), 9, 11; in Chandler Act (1938), 119–20, 122, 256n.42; counsel for, 76; mandatory, 119–20, 177–78; presumptive, 177–78; proxy voting for, 76, 78–79, 133, 146; U.S., 181, 197 Twinen, Linn, 145 Tyler, John, 32 unipeaked preferences, 248n.20 Unitas, Johnny, United States Bankruptcy Administration, 139, 143 United States Trustee, 181, 197 universalism, 235–36 unliquidated claim, 148, 218 Unsafe at Any Speed (Nader), 135 unsecured creditors, 7, 9; in uencing legislative process, 83–84, 85; payment to, 67–68; vs secured creditors, 85 unsecured creditors committee, Untermyer, Samuel, 110 upset prices, 60, 104 Vanderbilt, Cornelius, 50–51 voluntary bankruptcy, 3, 8, 28, 32 Voluntary Only Bankruptcy, 29–33, 30t, 248n.20 voluntary reorganization, 64 voting: cycling and, 28–34; problems with, 80; prohibition, 121–22; provisions, 121; roll call, 199 Wabash, St Louis and Pacific Railroad Company v Illinois, 55 Wabash reorganization, 64, 253n.36 Wallop, Malcolm, 158 Warren, Charles, 12, 238, 245n.9, 247n.4 Warren, Elizabeth, 13, 16, 188–89, 195, 198, 200–201, 203, 206, 224, 242, 267n.18 Webster, Daniel, 23, 26, 28, 29 Weinfeld, Edward, 139 Weingast, Barry, 248n.22, 264n.23 Weinstein, Jacob, 75, 88, 89, 90–91, 95, 99, 260n.49, 262n.32 Weintraub, Benjamin, 162 Westbrook, Jay, 13, 195, 242 Whig party, 31–32 Whitford, Bill, 211, 213, 267n.1 Wholesale Grocers Association, 83 Will, Hubert, 139 Williamson, Brady, 188, 198 Williamson, Oliver, 62 Wilson, Woodrow, 79 Winslow, Lanier & Company, 49 Wolf, Block & Schorr, 222 Zupan, Mark, 81 ... American bankruptcy law touches on all aspects of American life Within a few years, I found myself writing a law school paper on bankruptcy, practicing in a law rm’s bankruptcy department, and then... Shortly after I left law school, I learned that the history of American bankruptcy laws actually was more complicated (and even more interesting) than I had initially realized The old law may have... Cataloging -in- Publication Data Skeel, David A Jr 196 1Debts dominion: a history of backruptcy law in America / David A Skeel, Jr Includes bibliographical references and index ISBN 0-691-08810-1 (CL : alk paper) Bankruptcy United