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Boyd's Legacy and Blackstone's Ghost


Robert K. Rasmussen


USC Gould School of Law

Douglas G. Baird


University of Chicago Law School

December 15, 1999

Vanderbilt Law Joe C. Davis Research Paper No. 99-8; and University of Chicago Law School John M. Olin Law & Economics Working Paper No. 94

Abstract:     
Section 1129(b) of the Bankruptcy Code gives each class of unsecured claims the right to insist that a reorganization plan be "fair and equitable" and to prevent those junior to them from receiving "property" on account of their old interests. The Bankruptcy Code is often said to embrace a rule of absolute priority, but if it does so, it is only through these restrictions. Hence, the meaning of the words "fair and equitable" and "property" is the terrain on which priority battles are contested. One must choose among different methods of statutory interpretation. One can derive priority rules by examining the judicial evolution of the words "fair and equitable" before they were incorporated into the 1978 Bankruptcy Reform Act. Alternatively, one can look to the word "property," and derive priority rules by trying to define this word. Opinions in the most recent Supreme Court case on this issue, 203 N. LaSalle, exemplify these competing approaches. Using these opinions as its starting point, this paper explores the way in which priority rules in bankruptcy have evolved over time and shows how the absolute priority rule is harder to derive from the statute and hence more contingent, positively and normatively, than commonly supposed.

Number of Pages in PDF File: 72

JEL Classification: K0, G3

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Date posted: February 15, 2000  

Suggested Citation

Rasmussen, Robert K. and Baird, Douglas G., Boyd's Legacy and Blackstone's Ghost (December 15, 1999). Supreme Court Review, 1999. Available at SSRN: http://ssrn.com/abstract=205368 or http://dx.doi.org/10.2139/ssrn.205368

Contact Information

Robert K. Rasmussen (Contact Author)
USC Gould School of Law ( email )
699 Exposition Boulevard
Los Angeles, CA 90089-0071
United States
213-740-6473 (Phone)
213-740-5502 (Fax)

Douglas G. Baird
University of Chicago Law School ( email )
1111 E. 60th St.
Chicago, IL 60637
United States
773-702-9571 (Phone)
773-702-0730 (Fax)
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