By Laura N. Coordes (Associate Professor of Law, Sandra Day O’Connor College of Law)
The U.S. Bankruptcy Code is the primary source of bankruptcy relief for debtors in the United States. But it is not the only source. Over the years, Congress has occasionally created bespoke bankruptcy—customized debt relief designed for a particular group of debtors. Bespoke bankruptcy may provide desperately needed bankruptcy relief to entities that are ineligible or otherwise unable to access bankruptcy through the Bankruptcy Code. But bespoke bankruptcy is also fraught with difficulties. To what extent should bespoke bankruptcy be used or developed instead of the Bankruptcy Code?
In Bespoke Bankruptcy (forthcoming in the Florida Law Review), I take up this question. The Article begins by acknowledging the limitations of the Bankruptcy Code and highlighting instances where Code-based bankruptcy relief does not work. Some entities, which I term “bankruptcy misfits,” require such different relief mechanisms that using the Bankruptcy Code becomes difficult, impractical, or even impossible. To assist these entities, Congress has historically chosen either to amend the Bankruptcy Code or to create alternative debt relief processes through statutes outside of the Code. The Article then examines the extent to which bespoke bankruptcy, as opposed to Code amendments, should be used to provide other bankruptcy misfits debt relief.
To address this question, the Article devises a framework that policymakers can use to decide when and how to implement bespoke relief. In so doing, this Article sets the stage for a new direction in bankruptcy law and theory: one where bespoke bankruptcy performs a limited, but critical, role in providing relief to entities that the Bankruptcy Code either does not or cannot assist.
The full article is available here.