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On the Nature of Bankruptcy Litigation

posted by Bob Lawless

This semester I am teaching a class in Bankruptcy Reorganizations, which is principally a class in chapter 11. This is an advanced upper-level elective that draws many students in their last semester of law school. Consequently, in teaching the class, I like to emphasize not only the details of this complex topic but also help along the process of transitioning these students to practicing legal professionals.

One of my themes is the issue of being an advocate in complex business and commercial law cases like those presented by a chapter 11 filing. Law schools generally focus their moot court training on easily understood cases such as a simple slip-and-fall or on esoteric constitutional law questions. My belief is that skills learned in these sorts of exercises do not transfer easily to the business and commercial law environment. Although everyone can understand that the negligent tortfeasor should pay for his wrong, few people come to law school with an innate sense of whether a secured creditor should receive the time value of its collateral during the pendency of a bankruptcy case. Without experience in the business world, students can see the facts in a commercial dispute as dry and abstract, about money only and having little to do with right and wrong. My belief is that commercial disputes are won or lost for the same reasons that most any dispute is won or lost.

Consequently, I structure my class around a series of oral arguments and court briefs that the students present regarding problems in the class materials I have written. Each student must prepare two arguments and briefs. Unlike most every other moot court competition, I ask the other students to sit as a court and decide the case presented by the problem. That task includes writing a judicial opinion once a semester explaining their position. The problems generally have reasonable arguments on either side. The point is to get the students to think about how to adovocate effectively in business matters. This is an important skill whether they become litigators or transactional lawyers--at some level, it's all about advocacy. Here is some advice I suggest to my students:

(1) Know the facts: Understand what has happened in the case.  How much money is involved?  What are the consequences of the various actions that the court might take?  And so forth.

(2) Present the facts simply:  If you cannot explain in one simple sentence why your client should win, she probably will not.

(3) Know the law:  What code sections are involved with the problem?  Where do the interpretive difficulties lie?  Are there cases very similar to the one you are arguing?  Is there precedent from a court of appeals or the Supreme Court?  Does your position make sense in light of the Code as a whole, taking into account the mechanisms of other chapters.

(4) Know your remedy:  Law students rarely understand something lawyers never forget:  what relief can the court give you?  Do you want relief from the stay or an order requiring the debtor to take a certain action?  Be prepared to explain the relief you seek from the court.

(5) Know the relevant procedures:  Often overlooked are the Federal Rules of Bankruptcy Procedure and local court rules.  Do they have provisions relevant to your case?

Although that advice was written specifically for students in a Bankruptcy Reorganizations class, I believe it generalizes well to many business and commercial disputes.

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  • 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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