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On Behalf of Bankruptcy Lawyers Everywhere, Mr. Liptak You Have Hurt Our Feelings

posted by Bob Lawless

Bankruptcy lawyers and judges often toil away in the lower reaches of the federal judicial over not-so-momentous issues such as the value of a refrigerator. When bankruptcy issues get to the Supreme Court, we tend to get excited. Boy, did that balloon get popped in Adam Liptak's New York Times column this morning about a recent tendency toward unanimity in the Supreme Court:

For now, consensus reigns. That is partly because some of the recent decisions were decidedly minor. . . . Another, about the meaning of the word “defalcation” in the Bankruptcy Code, must have made Justice Stephen G. Breyer, its author, wonder what he had done to deserve the assignment.

Ouch. Minor? We have given this decision extensive coverage on Credit Slips here and . . . OK, well we haven't. When the case was granted cert, I did post a photo noting that it involved a bank I drive past every morning. It was a nice photo.

Liptak vastly overstates his point. Out of the million bankruptcy filings each year, this decision could literally affect several. And, the meaning of "defalcation" is an intellectually interesting exercise. It almost sounds like something you should not be able to say on television.  "Defalcation" is also not to be confused with "defalconation," which describes what happens in the NFL every year around playoff time with a certain Atlanta-area team.

Comments

I disagree with the Supreme Court's decision - falcons should be fully exempt. Allowing Chapter 7 trustees to engage in the defalconation of poor but honest debtors must be stopped!

Questions about the meaning of odd terms in the Bankruptcy Code may not be as sexy as the sort of thing usually written up in the New York Times. But as you well know or ought to, those questions affect real cases involving real people. I've never actually had to value a refrigerator, but I've done a few cars and modest houses, even a small apartment building or two. I suppose those weren't real monumental matters either. The value of property does seem pretty trivial -- until, of course, its your property. Then it's the most important thing in the world.

Adam Liptak's snarky comment in the Times wasn't funny, Prof. Lawless. But at least he had ignorance as an excuse. What's yours?

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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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