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Published online by Cambridge University Press: 28 February 2019
This article will review early Bankruptcy Laws, examine technical amendments for 11 U.S.C. § 507(a)(7) and analyze the findings.
1 H.R. 4160, 79th Cong. (1946). The bill was named Referees’ Salary Bill and established the salary of bankruptcy referees. See 51 Com. L. J. 147 (1946) and 52 Com. L. J. 85 (1947) for a brief summary of the bill. See 91 Cong. Rec. 10013 (1945) for a modest summary of early bankruptcy laws starting from the Roman Law of the Twelve Tablets in the 5th Century BC, which was said to have protected creditors and allowed physical harm to punish debtors in Bankruptcy. See also Kennedy, David S., Lindner, Erno, The Bankruptcy Amendatory Act of 1938, The Legacy of the Honorable Walter Chandler, 41 U. Mem. L. Rev. 769 (2011) for summary about early Roman and English bankruptcy laws.Google Scholar
2 Wikipedia http://en.wikipedia.org/wiki/Clarence_E._Hancock (last visited March 18, 2013)Google Scholar
3 91 Cong. Rec. 10013 (1945). Congressman Hancock would leave office and die within a year of making his speech in the 1945 Congressional debate of H.R. 4160, 79th Cong. (1946) (Govtrack.us http://www.govtrack.us/congress/members/clarence_hancock/405028 (last visited March 18, 2013) (Wikipedia http://en.wikipedia.org/wiki/Clarence_E._Hancock (last visited March 18, 2013). H.R. 4160, 79th Cong. (1946) passed legislation and became Public Law 464, 79th Congress. The enactment of Public Law 464, 79th Congress gave bankruptcy referees a salary and other stipulations to administer bankruptcy cases. The American legal system used bankruptcy referees to administer bankruptcy cases before we had bankruptcy judges. See Charles Seligson, Bankruptcy, 1945 Ann. Sur. Am. L. 778-814 (1945) for an analysis of court cases decided by bankruptcy referees in 1945.Google Scholar
4 Plank, Thomas E., State Sovereignty in Bankruptcy After Katz, 15 ABI L. Rev. 59 at 62 (2007).Google Scholar
5 Id. at 62-63.Google Scholar
6 An acte againste suche persones as doo make bankrupte, 3 Statutes of the Realm 899-901 (1542).Google Scholar
7 Kennedy, David S., Lindner, Erno, The Bankruptcy Amendatory Act of 1938, The Legacy of the Honorable Walter Chandler, 41 U. MEM. L. REV. 769 (2011).Google Scholar
8 3 Statutes of the Realm 899 (1542).Google Scholar
9 Id. at 900.Google Scholar
10 Id. at 901.Google Scholar
11 See Kennedy, David S., Lindner, Erno, The Bankruptcy Amendatory Act of 1938, The Legacy of the Honorable Walter Chandler, 41 U. Mem. L. Rev. 769 (2011).Google Scholar
12 See Kadens, Emily, The Last Bankrupt Hanged: Balancing Incentives In the Development Of Bankruptcy Law, 59 Duke L.J. 1229 (2010) for a detailed account of the “Thomas Pitkin Affair” in 1705; a scandal that pushed Parliament to react by ruling for capital punishment against people convicted of fraudulent bankruptcy. The capital punishment provision for fraudulent bankruptcy was repealed in 1820; see Id. At page —.Google Scholar
13 Kadens, Emily, The Last Bankrupt Hanged: Balancing Incentives In the Development Of Bankruptcy Law, 59 Duke L.J. 1229 (2010).Google Scholar
14 91 Cong. Rec. 10013 (1945)Google Scholar
15 Section 1 of the Bankruptcy Act of 1800 can be read as protecting creditors by enabling a penalty for debtors convicted of fraudulent bankruptcy. The law labeled a person as being bankrupt if the person willfully avoided repaying their debts. Section 1 of the Act read, “if any merchant, or any person, residing within the United States, … shall with intent unlawfully to delay or defraud his or her creditors, … every such person shall be deemed and adjudged a bankrupt.”15 When someone was found to be bankrupt, the procedures for repaying debt kicked in, including liquidating estates and assets. (2 Stat. 21 1799-1813, the Bankruptcy Act of 1800.)Google Scholar
16 Section 2 of the Bankruptcy Act of 1800 can be read as protecting debtors. It gave people who were erroneously accused of owing debt the right to sue for damages. Section 2 read, “if such debt shall not be really due, or after such commission taken out it cannot be proved that the party was a bankrupt, the said judge shall, upon the petition of the party aggrieved, … deliver such bond to the said party, who may sue thereon, and recover such damages.” (2 Stat. 21 1799-1813, the Bankruptcy Act of 1800.)Google Scholar
17 Collier on Bankruptcy explains that, “[the Bankruptcy Act of 1800] allowed a discharge of … debtor's debts and permitted the release of a debtor from debtor's prison upon surrender of all nonexempt assets.”Google Scholar
18 Land of Promise: An Economic History of the United States (2012), page 29.Google Scholar
19 See Id. At 29.Google Scholar
20 Weisman, Morris, The Bankruptcy of Robert Morris 45 Com. L. J. 163 AT 163-165 (1940).Google Scholar
21 Munitz, Gerald F., Keynote Address: Stories in the Development of Bankruptcy Law, 42 Golden Gate U. L. Rev. 539 (2011-2012).Google Scholar
22 Weisman, Morris, The Bankruptcy of Robert Morris 45 Com. L. J. 163 AT 163-165 (1940).Google Scholar
23 William Miller Collier was born in 1867 and passed away in 1956. He wrote the legal treatise Collier on Bankruptcy. The treatise is now updated by legal scholars. Collier on Bankruptcy has a legislative history section for the Bankruptcy Laws. This puts legislative documents for Bankruptcy laws in one place.Google Scholar
24 Klee, Kenneth N., Legislative History of the New Bankruptcy Law, 28 Depaul L. Rev. 941-960 (1979).Google Scholar
25 Nourse, Victoria F., A Decision Theory Of Statutory Interpretation: Legislative History By the Rules, 122 Yale L.J. 90 (2012).Google Scholar
26 See Id. at page 98.Google Scholar
27 E.g., Pojanowski, Jeffrey A., reports that there has been a scholarly debate between legislative history and textualism for approximately 30 years. He writes that, “starting in the early 1980s, founding textualists emphasized empirical challenges to the use of legislative history and the coherence of invoking a legislative body's “intent” or “purpose.” In response, textualism's critics drew on public choice theory to defend a moderated use of legislative history and to shore up the cogency and reliability of appeals to congressional intent and purpose.” He continues by stating that textualism, according to these criticisms, was premised on bad political science and was internally contradictory in its use of external sources.” Jeffrey A. Pojanowski, Statutes in Common Law Courts, 91 Tex. L. Rev. 479 (2013). See also, scholars have noted that Justice Scalia has a fundamental belief in textualism, “Justice Scalia insisted that a strong version of textualism was the only legitimate methodology for statutory interpretation, and rejected as illegitimate reliance on most forms of legislative history as guides to statutory meaning.” But see, William K. Kelley writes that “Numerous scholars produced reams of work challenging Justice Scalia's methodology. Others took textualism and defended and refined it. Although the Court has continued to rely on legislative history, the dominant interpretive norm on the Court—even among those Justices, like Justice Breyer, who defend the use of legislative history where they deem it appropriate—has come to focus keenly on the text of the statutes at issue.” William K. Kelley, 80 George Washington L. Rev. 1601 (2012).” Contra., in A Dialogue on Statutory and Constitutional Interpretation, Justice Scalia answers several questions about the debate and stands by his support of textualism. Justice Scalia says, “I, frankly, don't care what the legislators’ purpose is beyond that which is embodied in the duly enacted text… We are governed by the laws that the Members of Congress enact, not by their unenacted intentions. And if they said “up” when they meant “down” and you could prove by the testimony of 100 bishops that that's what they meant, I would still say, too bad. Again, we are governed by laws, and what the laws say is what the laws mean.” 80 George Washington L. Rev. 1610 (2012).Google Scholar
28 Heinonline's Legislative Library is a tremendously helpful source of legislative information. The only drawback is that it is not comprehensive and includes only selective laws.Google Scholar
29 U.S.C.C.A.N. is a reliable source of legislative history. It contains the legislative history of most laws. However, it is published by Thompson Reuters, which means Westlaw and Westlaw is expensive.Google Scholar
30 I have also used a combination of Thomas.loc.gov, GAO.gov, GPO's Federal Digital System (FDsys), Heinonline's Congressional Library, and Google to fill in the gaps.Google Scholar
31 The CRS report Legislative History Resource Material is an excellent choice to read a list of legislative history sources are available. Additionally, a source that I have saved to my favorites and read severl times is Federal Legislative History Research: A Practitioner's Guide to Compiling the Documents. The sources are important because they are the access point to analyzing legislative documents for intent, which is helpful when you are researching legislative intent for a section in the Bankruptcy Code.Google Scholar
32 Westlaw Next, last visited 3/13/13Google Scholar
33 Westlaw Next, last visited 3/13/13Google Scholar
34 I scanned the 2010 amendment. Pub. Law 111-327, 111th Congress, 124 Stat. 3557Google Scholar
35 The December 2010 amendment reads: “in section 507(a)(8)(A)(ii) by striking the period at the end and inserting “; or”,” Accessed from http://www.gpo.gov/fdsys/pkg/PLAW-111publ327/html/PLAW-111publ327.htm Google Scholar
36 I scanned the 2010 amendment. Pub. Law 111-203, 111th Congress, 124 Stat. 2114.Google Scholar
37 The July 2010 amendment reads: “Conforming Amendment—Section 507(a)(2) of title 11, United States Code, is amended by inserting “unsecured claims of any Federal reserve bank related to loans made through programs or facilities authorized under section 13(3) of the Federal Reserve Act (12 U.S.C. 343),” after “this title,”.” Accessed http://www.gpo.gov/fdsys/pkg/PLAW-111publ203/html/PLAW-111publ203.htm *37 Google Scholar
38 I scanned through the 2005 amendment. Pub. Law 109-8, 109the Congress, 119 Stat. 51Google Scholar
39 The 2005 amendment reads: “Section 507(a) of title 11, United States Code, is amended– (1) by striking paragraph (7); (2) by redesignating paragraphs (1) through (6) as paragraphs (2) through (7), respectively; (3) in paragraph (2), as so redesignated, by striking “First” and inserting “Second”; (4) in paragraph (3), as so redesignated, by striking “Second” and inserting “Third”; (5) in paragraph (4), as so redesignated– (A) by striking “Third” and inserting “Fourth”; and (B) by striking the semicolon at the end and inserting a period; (6) in paragraph (5), as so redesignated, by striking “Fourth” and inserting “Fifth”; (7) in paragraph (6), as so redesignated, by striking “Fifth” and inserting “Sixth”; (8) in paragraph (7), as so redesignated, by striking “Sixth” and inserting “Seventh”; and (9) by inserting before paragraph (2), as so redesignated, the following: “(1) First: “(A) Allowed unsecured claims for domestic support obligations that, as of the date of the filing of the petition in a case under this title, are owed to or recoverable by a spouse, former spouse, or child of the debtor, or such child's parent, legal guardian, or responsible relative, without regard to whether the claim is filed by such person or is filed by a governmental unit on behalf of such person, on the condition that funds received under this paragraph by a governmental unit under this title after the date of the filing of the petition shall be applied and distributed in accordance with applicable non-bankruptcy law. “(B) Subject to claims under subparagraph (A), allowed unsecured claims for domestic support obligations that, as of the date of the filing of the petition, are assigned by a spouse, former spouse, child of the debtor, or such child's parent, legal guardian, or responsible relative to a governmental unit (unless such obligation is assigned voluntarily by the spouse, former spouse, child, parent, legal guardian, or responsible relative of the child for the purpose of collecting the debt) or are owed directly to or recoverable by a governmental unit under applicable non-bankruptcy law, on the condition that funds received under this paragraph by a governmental unit under this title after the date of the filing of the petition be applied and distributed in accordance with applicable non-bankruptcy law. “(C) If a trustee is appointed or elected under section 701, 702, 703, 1104, 1202, or 1302, the administrative expenses of the trustee allowed under paragraphs (1)(A), (2), and (6) of section 503(b) shall be paid before payment of claims under subparagraphs (A) and (B), to the extent that the trustee administers assets that are otherwise available for the payment of such claims.”.Google Scholar
40 I scanned the 1994 amendment. Public Law 103-394, 108 Stat. 4112, Bankruptcy Reform Act of 1994Google Scholar
41 The amended statute reads: “(c) PRIORITIES- Section 507(a) of title 11, United States Code, is amended– (1) in paragraph (4)(B)(i) by striking ‘$2,000’ and inserting ‘$4,000', (2) in paragraph (5) by striking ‘$2,000’ and inserting ‘$4,000', and (3) in paragraph (6) by striking ‘$900’ and inserting ‘$1,800'.” The amended statute also reads “(c) PRIORITY OF CLAIMS- Section 507(a) of title 11, United States Code, is amended— (1) in paragraph (8) by striking ‘(8) Eighth’ and inserting ‘(9) Ninth', (2) in paragraph (7) by striking ‘(7) Seventh’ and inserting ‘(8) Eighth', and (3) by inserting after paragraph (6) the following: '(7) Seventh, allowed claims for debts to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement, but not to the extent that such debt– '(A) is assigned to another entity, voluntarily, by operation of law, or otherwise; or '(B) includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance or support.'.”Google Scholar
42 I scanned the 1990 amendment- cite it Public Law 101-647, 104 Stat. 4867, Crime Control Act of 1990Google Scholar
43 The amended statute reads: “(d) COMMITMENTS TO MAINTAIN THE CAPITAL OF FEDERALLY INSURED DEPOSITORY INSTITUTIONS- Section 507(a) of title 11, United States Code, is amended by adding at the end the following new paragraph: '(8) Eighth, allowed unsecured claims based upon any commitment by the debtor to the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, the Director of the Office of Thrift Supervision, the Comptroller of the Currency, or the Board of Governors of the Federal Reserve System, or their predecessors or successors, to maintain the capital of an insured depository institution.'.” Citation hereGoogle Scholar
44 I scanned the 1984 Amendment. 98 Stat. 358Google Scholar
45 11 U.S.C. 507(a)(5)Google Scholar
46 I scanned the 1978 Statute. 92 Stat. 2583Google Scholar
47 11 U.S.C. 507(8)Google Scholar
48 Cornell Legal Institute: http://www.law.cornell.edu/ Google Scholar
49 This reference is to the seventh point out of eight points in discussing the sixth priority. It reads, “Seventh. Excise taxes on transactions for which a return, if required, is last due, under otherwise applicable law or under any extension of time to file the return, within 3 years before the petition was filed, or thereafter. If a return is not required with regard to a particular excise tax, priority is given if the transaction or event itself occurred within 3 years before the date on which the title 11 petition was filed. All Federal, State or local taxes generally considered or expressly treated as excises are covered by this category, including sales taxes, estate and gift taxes, gasoline and special fuel taxes, and wagering and truck taxes.”Google Scholar
50 Collier on Bankruptcy, Sixteenth Edition, Copyright 2012, Matthew Bender & Company, Inc., a member of the LexisNexis Group. App. Pt. 4 Bankruptcy Reform Act of 1978, App. Pt. 4(b) Legislative History of the New Bankruptcy Law, II. Using Legislative History to Interpret the Law, B-4b COLLIER ON BANKRUPTCYGoogle Scholar
51 11 U.S.C. 507(a)(5).Google Scholar
52 11 U.S.C. 507(a)(6).Google Scholar
53 11 U.S.C. 104Google Scholar
54 11 U.S.C. § 104. Adjustment of dollar amounts. 78 F.R. 12089.Google Scholar
55 P 1129.LH History of Section 1129Google Scholar
56 Senate Bill S. 1559, 104th Congress, Bankruptcy Technical Corrections Act of 1996.Google Scholar
57 Charles, Senator “Chuck” Grassley, CONGRESSIONAL RECORD, Tuesday, February 06, 1996, 104th Congress, 2nd Session, 142 Cong. Rec. 2380 1996.Google Scholar
58 The record shows that S.1559, Bankruptcy Technical Corrections Act of 1996, did not pass legislation: http://www.govtrack.us/congress/bills/104/s1559 Google Scholar
59 Jean Braucher, Am. Bankr. Inst. J., Feb. 2011, at 8, Jean Braucher. ABI Journal, Legislative Highlights: Technical Corrections have Some Substantive Effects, Am. Bankr. Inst. J., Feb. 2011, at 8 (2011).Google Scholar
60 See Congress.gov for a summary of the Bankruptcy Technical Corrections Act of 2010 can be read on Congress.gov: http://beta.congress.gov/bill/111th-congress/house-bill/6198?q=%22bankruptcy%20tech-nical%20corrections%22 Congress.gov is in beta form. It will replace Thomas.loc.gov when it is launched. You can attend a live webinar on using Congress.gov for legislative research: http://www.loc.gov/law/opportunities/seminar-orient.php Google Scholar
61 Braucher, Jean, Am. Bankr. Inst. J., Feb. 2011, at 8, Jean Braucher. ABI Journal, Legislative Highlights: Technical Corrections have Some Substantive Effects, Am. Bankr. Inst. J., Feb. 2011, at 8 (2011).Google Scholar
62 Braucher, Jean, Am. Bankr. Inst. J., Feb. 2011, at 8, Jean Braucher. ABI Journal, Legislative Highlights: Technical Corrections have Some Substantive Effects, Am. Bankr. Inst. J., Feb. 2011, at 8 (2011).Google Scholar