Publication Date

2026

Journal

Western Legal History

Abstract

Nearly fifty years after Congress enacted the Bankruptcy Code, a debate has emerged over the existence and desirability of “bankruptcy exceptionalism”: the idea that bankruptcy law should utilize “flexibility, creativity, and pragmatism over technicalities of process and form” to “prioritize fidelity” to “the purposes for which it was created.”  This question is especially salient in the world of corporate reorganizations, where distressed companies and their investors retain counsel precisely for the purpose of hammering out deals in complex commercial settings. In this Essay, I defend bankruptcy exceptionalism in corporate reorganizations.  I show that bankruptcy exceptionalism is a necessary and desirable response to the complex dynamics surrounding incomplete contracting, collective action problems, and opportunism that corporate distress can foment. Ignoring those dynamics when interpreting the Bankruptcy Code risks undermining corporate reorganizations’ capacity for solving these problems in the first place. Rather than being a bug, bankruptcy exceptionalism has been a feature of the Bankruptcy Code and ought to be celebrated.

Volume

36

Issue

1 & 2

First Page

163

Last Page

174

Publisher

Ninth Judicial Circuit Historical Society

Disciplines

Bankruptcy Law | Law

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