After a brief, high profile debate, proposals to create a new bankruptcy framework for states dropped from sight in Washington in early 2011. With the debate’s initial passions having cooled, at least for a time, we can now consider state bankruptcy, as well as other responses to states’ fiscal crisis, a bit more quietly and carefully. In this Article, I begin by briefly outlining a theoretical and practical case for state bankruptcy. Because I have developed these arguments in much more detail in companion work, I will keep the discussion comparatively brief. My particular concern here is, as the title suggests, on developing a bankruptcy framework from the ground up. After briefly discussing what bankruptcy is, and some of the confusion befogging this term, I will argue that state bankruptcy should emphasize five key objectives, an approach I will compare to two possible alternatives. I then will consider six facets of the bankruptcy case: initiation; proposing a reorganization plan; the role of a stay, reachback provisions and confirmation rules; the possibility of “guillotines” or “checks” tailored to the state bankruptcy context; financing; and the structure of the bankruptcy court.
Framework for bankruptcy provisions for the states, reorganization, state government debt, bonds, markets, legislation
Skeel, David A. Jr., "State Bankruptcy from the Ground Up" (2011). Faculty Scholarship at Penn Law. 371.
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