For readers who need a break from the Supreme Court nominations battle, I suggest the cheery interlude of bankruptcy law. GM’s bankruptcy raises numerous legal and policy issues, particularly if the government seeks to displace creditors or to minimize the reorganizing cuts necessary for GM to reemerge as a profitable company. For a detailed analysis, I recommend Andrew Grossman’s thoughtful testimony before the House Judiciary Committee assessing Chrysler’s bankruptcy, and looking ahead to GM’s bankruptcy. He examines how the Obama administration’s attempts to circumvent bankruptcy law’s priority scheme in order to benefit cronies like the UAW undermines the rule of law, and makes clear that more, deeper cuts are necessary to make government motors a profitable company once again.
In other bankruptcy-related news, I wrote a piece for WLF last month examining the risk of increased forum shopping which could occur as bankruptcy filings increase. Whether this will pose a serious threat to the rule of law may well turn on the Marshall v. Marshall, the Ninth Circuit’s remand of the infamous Anna Nicole bankruptcy case which was decided by the Supreme Court in 2006. Like Bleak House, all of the original litigants in the case are now deceased, but the litigation lives on. If the Ninth Circuit were to permit Anna Nicole Smith’s estate to use the bankruptcy courts to re-litigate claims she lost in state courts, and thereby to get millions of dollars from her late husband’s estate contrary to his estate plan, then look for an explosion of bankruptcy filings, made by those seeking to use bankruptcy courts to achieve ends other than relief from debts.