One size fits none: An overdue reform for Chapter 7 trustees

Despite their differences, consumer and business Chapter 7 cases are administered by the same trustees under the same rules. This note advances four normative arguments against this one-size-fits-all approach, using novel empirical research to emphasize its shortcomings. First, human debtors have ri...

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Bibliographic Details
Published in:The Yale law journal 2022-01, Vol.131 (3), p.976-1034
Main Authors: Pang, Belisa, Shehada, Emile
Format: Article
Language:English
Subjects:
Bankruptcy
Business
Compensation
Compensation (Law)
Consumers
Economic aspects
Human rights
Law and legislation
Legal status, laws, etc
Liquidation
Policy making
Research methodology
Socioeconomic factors
Trustees
Trusts and trustees
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Summary:Despite their differences, consumer and business Chapter 7 cases are administered by the same trustees under the same rules. This note advances four normative arguments against this one-size-fits-all approach, using novel empirical research to emphasize its shortcomings. First, human debtors have rights that artificial entities do not. Second, trustees create different socioeconomic value for consumers and businesses. Third, trustees' day-to-day work differs significantly across case types. Finally, trustees receive far less judicial oversight in consumer cases. Accordingly, this note proposes two policy changes: (1) trustee compensation should differ for consumer and business cases, and (2) trustees should be allowed to specialize accordingly.
ISSN:0044-0094
1939-8611