Bankruptcy--An Historical Overview

The present bankruptcy law of the United States has a scope undreamed of when the bankruptcy power was written into the United States Constitution. Changes in bankruptcy law have developed with geometrical acceleration in the last fifty years. Bankruptcy law has participated in the ‘law explosion,’ of which much was written a few years ago, and has had its own special ‘explosion’ as a result of economic changes and the overhaul of the bankruptcy laws in 1978. When I started my practice of law in a bankruptcy firm thirty years ago, I quickly found out that there were very few attorneys who did business with the bankruptcy referee. The practice of bankruptcy was confined solely to specialists. Only the patent lawyers were as exclusively specialized, and no general firm dealt with a bankruptcy problem other than by referring it to a bankruptcy firm or consulting with bankruptcy counsel. Specialized bankruptcy firms, however, have long been inadequate in number to represent all parties in major proceedings. Thus, general firms across the land are now developing their own expertise. The bankruptcy court is no longer the private club room of a fraternity, but now appears to be full of pedestrians. Firms specializing in bankruptcy retain their importance as counsel in large and complex matters.

There is a bankruptcy law ‘explosion’ indeed. This Institute, which has assembled hundreds of participants to consider a number of very serious papers concerning the impact of bankruptcy law on a single industry and the special doctrines by which that industry has historically dealt with debtors and creditors, is one sign of that explosion. The purpose of this paper is to compare the history of bankruptcy and its principles with the maritime law in order to provide a setting for other papers which follow.