The Mass Tort Bankruptcy: A Pre-History

Abstract

The history of insolvency schemes as mass tort resolution devices is generally said to begin with the asbestos bankruptcies of the 1980s. This Article brings to light a much earlier example of the resolution of mass tort claims through another insolvency scheme — the equity receivership — that was a precursor to Chapter 11 of the Bankruptcy Code. The Article recounts the creation of a receivership after a fire at the Ringling Brothers circus killed and injured hundreds of spectators. It also describes the maneuvers of the key actors in the case and the legal landscape that explained their resort to a receivership instead of traditional civil litigation. The Article presents the Ringling Brothers case as more than a piece of historical trivia. The case raises a number of puzzles, most notably its success. While modern mass tort bankruptcies are criticized for a variety of perceived flaws, the Ringling Brothers receivership was widely praised. The Article considers a model of mass tort insolvency schemes as public law litigation in order to explain the different fates of the Ringling Brothers receivership and the modern mass tort bankruptcy.