‘Wither’ the Equity Powers of the Bankruptcy Court

Author: Mark N. Berman, Nixon Peabody LLP

The United States Supreme Court’s Law v. Siegel decision has been explained away as an understandable limitation of a bankruptcy court’s use of Bankruptcy Code Section 105(a)’s expansive authority based on conventional techniques of statutory construction. Bankruptcy courts will not be able to use Section 105(a) to authorize an order that is otherwise prohibited by another section of the Bankruptcy Code.  However, it is also possible to read the decision as yet another stop on the road to limiting the ability of the bankruptcy courts to ‘do equity.’

Revisiting Professor Levitin’s 2006 law review article entitled Toward a Federal Common Law of Bankruptcy: Judicial Lawmaking in a Statutory Regime, 80 Am. Bankr. L.J. 1-87 (2006), I posit that the equity jurisdiction of the bankruptcy courts has already been statutorily restricted and the United States Supreme Court has made it clear that everyone should be prepared for further limitation of what has historically been its power. The Supreme Court’s warning is repeated in this latest decision.

The full alert is available here.

[Editor: The full text of Professor Adam Levitin’s noted article, Toward a Federal Common Law of Bankruptcy: Judicial Lawmaking in a Statutory Regime, can be found here.]