Response to Laura N. Coordes, Bespoke Bankruptcy
Toward the end of every semester that I teach bankruptcy, I let my students vote on which “non-traditional” insolvency regimes they would like to study, including municipal bankruptcy, sovereign bankruptcy, and financial institutions. What I am really trying to do is convey to the students that the default procedures and substantive rules in Chapters 7 and 11 of the U.S. Bankruptcy Code do not apply to all types of enterprises.
In Bespoke Bankruptcy, Professor Laura N. Coordes has given me a gift: the gift of the right words to describe my tradition, and a theoretical framework to undergird it. As Professor Coordes puts it, the world is full of “bankruptcy misfits,” entities whose social purpose, governance structure, or financial profile makes the template model of reorganization under the Bankruptcy Code unwieldy or even counterproductive. For such entities, Congress sometimes enacts what Professor Coordes calls “bespoke bankruptcy,” a non-Code set of procedures and substantive rules designed to fit a small group of debtors.
By studying at least one type of bankruptcy misfit, my bankruptcy course takes a sharp left turn, veering away from the Code (familiar territory by that point) and towards a complicated new landscape. Professor Coordes’s core insight serves to remind scholars and practitioners that the terrain covered by lowercase-b “bankruptcy” extends far beyond the Code. From a theoretical perspective, scholars attempting to provide descriptive or normative theories of bankruptcy (or defend preexisting theories) should ensure that those theories account for bankruptcy misfits and the bespoke bankruptcy regimes designed to accommodate them.