Bankruptcy's Uncontested Axioms

Article excerpt

Debates about the law of corporate reorganizations often seem to be debates about facts.(1) From this it might seem that good empirical research can resolve the large differences that exist between competing camps of bankruptcy scholarship. First-rate empirical work has, of course, been done.(2) It has also changed the way some have thought about bankruptcy law.(3) Nevertheless, it would be a mistake to think that empirical studies will do much to end the current debates. To be sure, new information requires scholars and policymakers to update their prior beliefs, but rarely will so much information be available that differences can be resolved among those who begin at separate starting places. Strongly held prior beliefs will converge only if new information is plentiful. Among modern bankruptcy scholars, the starting places are far apart and the chance that new information will do much to bring them closer together is remote.

If it is unlikely that new information can bring scholars closer together, it might seem that nothing can. Prior beliefs can be compared to postulates in geometry. Euclidean geometry is based on the notion that only one line can run parallel to another through any given point. This idea is neither true nor false. One can build a coherent geometry either with this postulate, or with the postulate that multiple lines can run parallel to another line through a given point, or with the postulate that none can. Neither is more or less true than the other. All axioms in mathematics have this character.

It is a mistake, however, to assume that axioms are incontestable, even in mathematics. Axioms can be more or less interesting. Axioms can be more or less consistent with each other. They can be more or less complete.(4) Even in the world of pure mathematics, axioms can be assessed according to how useful they are.(5) In the messy universe of the law, it is not only even easier to cast a critical eye, it is also more important. In this Essay, I set out the two different sets of axioms now current among bankruptcy scholars, examine each, and suggest why people are drawn to one set or the other. I do not try to bridge the gap between the two camps, but rather to assess its implications, both for the future of scholarship and the dynamics of bankruptcy legislation.

In this Essay, I attempt to look at this problem as a neutral observer who comes to these questions without preconceptions. Nevertheless, these questions hold an interest for me precisely because I have been involved in these debates for a long time and have been strongly identified with the ranks of those whom I call proceduralists.(6) Hence, I must remind both myself and the reader of the difficulties I face in trying to assume the vantage point of a disinterested observer.(7)

My aim is twofold. First, I set out the ways in which these two sets of axioms have created the world in which bankruptcy scholars now find themselves--one in which there are two discrete groups, yet few in either group pay much attention to the other. Second, I explore the foundations of each set of axioms, quite apart from testing their empirical assumptions. The different axioms, I suggest, stem not from different political beliefs but rather from radically different views of the underlying normative bases of the role of bankruptcy law and the aims of legal scholarship.

Part I of the Essay identifies the two competing groups and outlines in general terms their different axioms. The next three Parts examine each competing axiom in turn. Part V connects the tensions between these competing axioms with the purposes the law serves and the politics of bankruptcy reform. Part VI concludes with observations about why these two groups start in such different places.

I. COMPETING AXIOMS

Sorting legal scholars into distinct camps is a dangerous business. Successful academics have views that are too complex and too modulated to be rigidly categorized. …