Having studied and researched, and written and spoken on, bankruptcy issues ad nauseam for more than three decades, I have traced the etymology, scope, and evolution of modern U.S. bankruptcy laws and practice as follows:
Aliquam fermentum volutpat erat. Pellentesque suscipit lacinia risus eu malesuada. Nam dapibus leo id volutpat suscipit. Pellentesque accumsan massa a velit ultrices luctus.
2) Early English bankruptcy laws were designed to assist creditors in collecting a debtor's assets, not to protect the debtor or discharge (forgive) the bankrupt's debts. The Bankruptcy Clause of the U.S. Constitution reflects this pro-creditor purpose. (In fact, debtor's prisons existed in many states well into the eighteenth century.) Like other provisions of the Constitution, the bankruptcy power granted in the U.S. Constitution was designed to encourage the development of uniform laws governing commerce in the United States and to alleviate the excesses of perceived pro-debtor state legislation that existed under the earlier Articles of Confederation. Bankruptcy law stems from U.S. Const. art. 1, § 8, cl. 4. which empowers Congress to establish “uniform [l]aws on the subject of Bankruptcies throughout the United States.”
4) Congress overhauled the system in 1978 by adopting a new federal bankruptcy statute (Bankruptcy Code) in response to perceived abuses in the 1960s and early 1970s. The Bankruptcy Code was further amended by the Bankruptcy Reform Act of 1994 (Reform Act). The Reform Act made several significant changes to the Bankruptcy Code, affecting both consumer and business bankruptcies, and benefitting both debtors and creditors.
5) The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was explicitly designed by Congress to make it more difficult for debtors to file a Chapter 7 Bankruptcy—under which most debts are forgiven (or discharged)--and instead required them to file a Chapter 13 Bankruptcy--under which the debts they incurred are discharged only after the debtor has repaid some portion of those debts. The BAPCA constituted the most extensive revision of the Bankruptcy Code since 1978. The goal of the Act was to streamline the Bankruptcy Code, speed up proceedings, limit abuses, and “level the playing field.” Approximately half of the Act’s provisions dealt with business, not consumers, and at least 21 provisions related in some manner to real estate.
6) The BAPCA, which contained more than 500 pages of legislation, did not contain any radical changes to the Bankruptcy Code with respect to its effect on commercial real estate transactions. But it did clarify several issues that were the subject of different interpretations and conflicting federal court decisions. The BAPCA also addressed some of the perceived abuses that were brought to light as the result of the filings of the largest business bankruptcies in history (including Enron and WorldCom). Some of the changes also limited the flexibility and discretion of bankruptcy courts to extend the time periods granted to debtors to approve or reject leases and formulate a plan.
