A RETROSPECTIVE LOOK AT BANKRUPTCY'S NEW FRONTIERS.

• Author: Jackson, Thomas H.
• Position: Symposium on the Fortieth Anniversary of the 1978 Bankruptcy Code

It is something between awkward and an honor to be asked, as the creators of this Symposium did, to be the keynote speaker at a gathering called "Bankruptcy's New Frontiers." The Symposium, by its very title, is--wholly appropriately--about where bankruptcy is going, and investigating, as well as celebrating, the enormous creativity, hard work, and genius of those who are at the cutting edge of helping bankruptcy law evolve to its "new frontiers." In that, I am at best a minor player from the perspective of 2017, notwithstanding my recent work in a side area dealing with bankruptcy and SIFIs--systemically important financial institutions--and despite a couple of energizing (for me, at least) pieces with David Skeel over the past half-dozen years.

That doesn't account for the honor. So, I am resigned (at least in part) to the idea--and hence the awkwardness--that my invitation here, as the keynote speaker, has less to do about my role in the future than the past--although one of my guiding beliefs as an academic has always been that all scholarship is never definitive, but is about moving the ball forward so that others, with new and different insights, can pick the ball up and run with exciting, pathbreaking scholarship. The best of the past is a part of the future. In that, I have significant pride in thinking my work moved the ball forward, inviting a host of new, and creative, people to become involved. I am "keynote" in the sense of "let's start with how we got to where we are, in a world in which we could reasonably talk about 'Bankruptcy's New Frontiers' and gather such an incredible group of academics, practitioners, and judges." (1)

And, in doing this, it is, I think, important to remember that not only normative frameworks change with time but, equally, so does the world to which the frameworks are responding. The "creditors' bargain" may have been the first comprehensive normative framework for thinking about bankruptcy law, as this Symposium postulates, but it was a product not only of the emerging scholastic work at that time, but also of the actual world--of firms, capital structures, and players--that existed at that time. In a recent piece that I resonate with (cogently entitled Three Ages of Bankruptcy), Mark Roe suggested that

we see core provisions emerging in practice, dominating for a time, and then fading in importance. Each decision-making method has had its heyday. Each method's rise and fall usually fit with underlying market conditions and basic bankruptcy goals, sometimes mapped to political ideology currents, and often reflected the influence of powerful groups, such as well-organized creditors. (2) That is, I believe, true not just of practice but of normative frameworks that respond to the world as we see it. It is an appropriate time to take stock of changes in organizations and practices, as well as theory and new analytical tools, to see to what extent what was novel, perhaps revolutionary, and perhaps normatively persuasive, thirty to forty years ago, needs ongoing adjustment and reform--exactly the work that those gathered here tonight have been so engaged in over the past twenty years.

But as this Symposium, so appropriately, does exactly that, it is at least interesting, and perhaps worthwhile, to travel back forty years in time when, I dare say, there wouldn't have been such a star-studded conference about "Bankruptcy's New Frontiers." (After all, and not irrelevant to what I am about to say, the Bankruptcy Code of 1978, following a brief historical "tradition" of forty-year intervals between major revisions, almost certainly to be broken in 2018, is of that age as well.)

I graduated from law school in 1975, and landed a job at Stanford Law School in early 1976 while clerking for Judge Marvin Frankel in the Southern District of New York. (3) A part of my appeal as a candidate, at least as I surmised then, was my interest in, and existing scholarship about, the Uniform Commercial Code, and particularly Article 9, dealing with secured transactions--not exactly a "hot button" topic for budding legal academics of that era. I had, while a third-year student at Yale Law School, coauthored a piece with my classmate Tony Kronman, called A Plea for the Financing Buyer, that was published by the Yale Law Journal in its first issue after our graduation. (4) I think no one would claim it was a major work, but it signaled an interest in the field. Then, as I began my clerkship with Judge Frankel, I passed some ideas I had in the general area on to my contracts and commercial law professor at Yale, Ellen Peters (who I had the good fortune of being a teaching assistant for during my final year at Yale). After a bit of back-and-forth, she suggested that we coauthor a piece, which we began to work on during my Frankel clerkship, dealing with intersections between Articles 2 and 9 of the Uniform Commercial Code. (5)

Thus, by the time I talked to Stanford Law School, I was "marked" as a commercial law, and, indeed, as a secured transactions, kind of guy--which didn't describe many people on the "potential legal academic" circuit at that time. I had never taken bankruptcy (or debtor-creditor) law at Yale from the Law School's luminary, J.W. Moore (although I did take a course on reorganizations--mostly about the New Haven Railroad--from a corporate law professor, Joe Bishop). (6) But, and I think reflective of the state of bankruptcy law at that time, Stanford had no one on its regular faculty teaching bankruptcy law. (It was fortunate enough to have one of the great practitioners of that era, George Treister, fly in as an adjunct professor from Los Angeles once a week for several years to teach a course on debtor-creditor relations.)

So, as I arrived at Stanford in 1977, Stanford had its eyes on me to eventually teach bankruptcy law, although in the beginning I occupied myself teaching Contracts, Consumer Law, and Secured Transactions. After taking a two-year leave to practice in San Francisco, I returned to Stanford Law School in the fall of 1981 and, with I suspect relief to those putting together the curriculum, indicated a desire to try my hand at teaching bankruptcy law. In the days of hard-copy books, not Internet-accessible material, all the bankruptcy casebooks at that time were still focused on cases under the Bankruptcy Act of 1898 (as well as its numbering system, so Section 60 instead of Section 547 for preferences). Thus, the presence of a new Bankruptcy Code, brought into being in significant part by my contemporaries--particularly the brilliant collaboration between my classmate Richard Levin and his Harvard counterpart, Ken Klee, working for opposite sides of the aisle in the House Judiciary Committee--was a major factor in how I decided to approach teaching (and thinking about) bankruptcy law. (I think it is easy to underestimate the galvanizing factor the "new" Bankruptcy Code brought to scholarship. For example, its synthesis of old Chapter X and Chapter XI into a new Chapter 11, with very different language and, to some extent, flexibility, invited not just academic, but also judicial, de novo work. In a number of ways, I was in the right place at the right time.)

Because I knew--at least beyond superficially--little actual bankruptcy law, I was not invested in a particular way of teaching the 1898 Bankruptcy Act, and had become increasingly fascinated in the emerging field of law and economics (as particularly evident by my 1978 piece on anticipatory repudiation in contract law (7) and my 1979 piece with Tony Kronman on secured financing and Priorities Among Creditors), (8) I concluded none of the then-existing casebooks would do--in retrospect, a rather daring move for a novice about to teach for the first time in the field. So, drawing on some old chestnuts (such as Case v. Los Angeles Lumber (9) and Local Loan Co. v. Hunt (10)), I fashioned my own set of course materials mostly from the first twelve or so volumes of the Bankruptcy Reporter.

Seeking an organizational theme, I was of course influenced by the then-extant casebooks, but I was also trying to figure out whether and how law and economics as a field might have something to say, and this led me to my crucial organizing theme for the course. That theme was to look at everything through the lens of "why do we have bankruptcy law in the first place?" While it was obvious "why" in the case of a "fresh start" for human beings (in the narrow sense of something that wasn't available outside of bankruptcy law, without necessarily explaining why that something was normatively useful), it was much less obvious "why" in the case of nonhuman entities, such...