On Being a Bankruptcy Lawyer in 1789

Historian Bruce Mann, author of Republic of Debtors: Bankruptcy in the Age of American Independence (2002), has submitted a sweeping 30 page review of bankruptcy law in the days of our founding fathers in an amicus curiae brief to the US Supreme Court in Central Virginia Comm. College v. Katz. "He files this brief," he writes, "because this case, which addresses an issue of vital importance to the bankruptcy system, turns in large part on eighteenth-century American history."

Professor Mann sides squarely with the bankruptcy trustee's position (as respondent) that individual states have no right of sovereign immunity in federal bankruptcy proceedings:

Contrary to the petitioners' argument, there is no evidence that at the time of the ratification of the Constitution the states reserved any right to assert sovereign immunity in any bankruptcy proceedings established pursuant to any Congressional exercise of the bankruptcy power conferred in art I, sect. 8, cl. 4. None of the known public or private discussions of bankruptcy - before, during or after the adoption and ratification of the Constitution - drew any distinction between public and private creditors. Any such distinction would have undermined the concept of a "fresh start," which was generally understood even then to be the fundamental purpose of the bankruptcy discharge. . . .
Both proponents and opponents of federal bankruptcy legislation recognized that the federal bankruptcy power necessarily entailed a concomitant abrogation of state sovereignty by binding states to discharges and by otherwise interfering with state sovereignty.

It will be interesting to see if the Petitioners from the State of Virginia find someone with an equally compelling opposing perspective. Stay tuned.


Steven Jakubowski

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