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75 Minutes

posted by Bob Lawless

This evening, I have 75 minutes to summarize U.S. bankruptcy law to our graduate-level law students who are here from other countries. We have a class that introduces them to U.S. law, and I was told they expressed an interest in bankruptcy law. That statement may have been a clever persuasive technique so that I would agree to give the lecture. Wait a minute . . . now that I think about it the instructor also teaches a class on effective advocacy. Duped again.

Actually, it is more likely that this interest in bankruptcy law reflects the growth of consumer credit overseas. As American-style consumer credit has spread around the globe so has American style consumer financial distress. I do not want to overstate the point because I am sure the class has an interest in both business and consumer bankruptcy. What I would like to do is focus on one or the other, but my task is to cover both.

I agreed to give the lecture because that is what colleagues should do at a university. As I have been preparing for the lecture, however, I have come to realize this has been an incredibly useful learning exercise for myself. It has focused me to think about what I consider to be the essential pieces of knowledge for this area. What should be emphasized in a 75-minute class that covers the whole of bankruptcy law?

Although there is undoubtedly no one correct way to do this, here are the points I want to emphasize tonight:

  • Systems: Bankruptcy law is part of several larger systems such as collections, the consumer credit industry, the business lending market, the general feedback loop for the economy, and the general social safety net. My thinking here has been greatly influenced by Professor Lynn LoPucki's work on analyzing law as part of larger systems.
  • History: One cannot truly understand where we are today without at least a rudimentary understanding of what came before. So, I will spend a few minutes on the development of U.S. bankruptcy law, the state alternatives that were available and remain available in some instances, how U.S. bankruptcy law came to be an exclusively federal law, and what it says about U.S. law that we think of consumer and business bankruptcy as the same law.
  • Doctrine: Although there is one Bankruptcy Code, there are essentially two bankruptcy laws--one for business and one for consumers.
    • Central features of both: concepts of liquidation and reorganization, structure of bankruptcy court system, eligibility, automatic stay, secured vs. unsecured debt, bankruptcy estate, plans/confirmation
    • Important consumer doctrines: discharge, exemptions, means testing, credit counseling
    • Important business doctrines: preferences, fraudulent transfers, avoiding powers generally, executory contracts, workouts

Only 75 minutes for all of that! Heavy sigh. If I had my druthers, I would spend even less time on the doctrine and perhaps add some coverage of the multidisciplinary research that is helping us understand business and consumer credit. (Professor Zelizer's posts the past two days are excellent examples of this research.) The readings they have suggested to me a heavier dose of doctrine. Of course, the best classes are where all this preparation goes for naught, and class takes off with a discussion started by a student question.

I will try to follow up this post with a post post posting on what happened in the class.

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Bankr-L

  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

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