The Structural Exceptionalism of Bankruptcy Administration

77 Pages Posted: 29 May 2012 Last revised: 4 Nov 2013

See all articles by Rafael I. Pardo

Rafael I. Pardo

Emory University School of Law

Kathryn A. Watts

University of Washington - School of Law

Date Written: May 29, 2012

Abstract

The current system of administration of the Bankruptcy Code is highly anomalous. It stands as one of the few major federal civil statutory regimes administered almost exclusively through adjudication in the courts, not through a federal regulatory agency. This means that rather than fitting bankruptcy into a regulatory model, Congress has chosen to give the courts primary interpretive authority in the field of bankruptcy, delegating to courts the power to engage in residual policymaking.

Although scholars have noted some narrow aspects of the structural exceptionalism of bankruptcy administration, Congress’s decision to locate responsibility for bankruptcy policymaking almost exclusively with the federal judiciary, with little input from administrative agencies, has evaded scholarly attention. This Article aims to fill the gap by analyzing Congress’s choice of delegate in the bankruptcy context and assessing the consequences of the congressional decision to locate residual policymaking power in the courts. After identifying the structural anomalies of the current court-centered model and some of the constitutional and policy-driven concerns that flow therefrom, this Article makes the case for moving bankruptcy toward an administrative model with a regulatory agency charged with setting bankruptcy policy. Such a shift away from bankruptcy exceptionalism could bring greater expertise, accountability, uniformity, accessibility, transparency, prospective clarity and flexibility to policymaking in the bankruptcy arena. In addition, such a shift could help alleviate some of the constitutional issues that cast doubt on the legitimacy of our current system, such as Article III questions highlighted by the Supreme Court’s 2011 decision in Stern v. Marshall.

Keywords: administrative law, agencies, bankruptcy, courts, delegation, institutional design, judges

Suggested Citation

Pardo, Rafael I. and Watts, Kathryn A., The Structural Exceptionalism of Bankruptcy Administration (May 29, 2012). UCLA Law Review, Vol. 60, No. 2, 2012; University of Washington School of Law Research Paper No. 2012-08; Emory Legal Studies Research Paper No. 12-209. Available at SSRN: https://ssrn.com/abstract=2070332

Rafael I. Pardo (Contact Author)

Emory University School of Law ( email )

1301 Clifton Road
Atlanta, GA 30322
United States

Kathryn A. Watts

University of Washington - School of Law ( email )

William H. Gates Hall
Box 353020
Seattle, WA 98105-3020
United States

HOME PAGE: https://www.law.washington.edu/directory/profile.aspx?ID=254

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