What Should Judges Do in Chapter 11?

In this symposium dedicated to the American Bankruptcy Institute’s Commission on Chapter 11 Reform, whose proposals remain a secret at the time of this writing, Professor Jacoby argues that doctrinal reforms to corporate bankruptcy are incomplete without considering the role of institutional actors, particularly judges and courts. The judge’s role tends to receive too-limited attention. First, chapter 11 is often characterized as an extension of corporate transacting rather than as complex federal court litigation. In addition to overemphasizing the corporate law elements of chapter 11 to the exclusion of other intersections, this view overlooks the fact that many civil and even criminal actions before the district court have strong transactional elements, Second, the 1978 Bankruptcy Code drafters exhorted judges to be no more or less than umpires of discrete disputes, perhaps leading some reformers to believe the question to be already asked and answered. Yet, the modern bankruptcy system, as evolved, encourages bankruptcy judges to accomplish divergent objectives: promote quick resolution of disputes through party settlement, and exercise independent duties even in the absence of party objection—issues with which the federal district court also continues to wrestle.

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