The Limited Lifespan of the Bankruptcy Estate: Managing Consumer and Small Business Reorganizations

Emory Bankruptcy Developments Journal, vol. 37, Issue 1, pg. 1

Duke Law School Public Law & Legal Theory Series No. 2021-30

63 Pages Posted: 12 Apr 2021

Date Written: January 1, 2021

Abstract

Congress has a great affinity for debt adjustment bankruptcies, in which a debtor keeps rather than liquidates her asset and instead repays creditors out of future income. Although originally the terrain of individual consumer debtors under chapter 13 of the Bankruptcy Code, Congress in 2019 dramatically expanded the scope of debt adjustment bankruptcy by making it available to small businesses. Most debt adjustment bankruptcies fail. The relative rights of debtors and creditors when tensions arise are therefore of great importance. Yet the law in this area is wholly unsettled. Doctrinally, the courts are deeply split on the lifespan of the bankruptcy estate. This article defends a theory of the bankruptcy estate in debt adjustment bankruptcies known as the estate termination theory. It holds that debtors in debt adjustment bankruptcies are both free from bankruptcy court supervision and not generally entitled to special bankruptcy protection. The article situates the limited lifespan bankruptcy estate in a model of bankruptcy it dubs “light-touch” bankruptcy, emphasizing the advantages of simple, streamlined, and cheaply administrable procedures.

Keywords: Bankruptcy

Suggested Citation

Seymour, Jonathan, The Limited Lifespan of the Bankruptcy Estate: Managing Consumer and Small Business Reorganizations (January 1, 2021). Emory Bankruptcy Developments Journal, vol. 37, Issue 1, pg. 1, Duke Law School Public Law & Legal Theory Series No. 2021-30, Available at SSRN: https://ssrn.com/abstract=3823453

Jonathan Seymour (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
93
Abstract Views
413
Rank
505,598
PlumX Metrics