Self-study
P1
Traditionally, corporate bankruptcy law placed highest priority on the orderly discharge of debts; courts generally ordered failed businesses to pay all creditors a set percentage of the amounts owed. ███
Traditional Approach ·
Discharge of debts is top priority
Modern Approach ·
“Reorganization” allows company to continue operating
Argument for Traditional Approach ·
Bankruptcy is solely to pay back creditors
Example of traditionalist: Jackson
P2
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Critique of Traditional Approach ·
Traditionalists do not consider other interests (employees, communities)
P3
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Argument for Modern Approach ·
Fairness for all parties through (1) inclusion and (2) rational planning
P4
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Main Conclusion ·
Modern approach is more equitable but also has weaknesses
Premise 1 ·
Credit will be more expensive
Premise 2 ·
No way of assessing vulnerability to loss
Passage Style
Critique or debate
18.
It can be inferred from ███ ███████ ████ ███████ █████ ██ ████ ██████ ██ █████ ████ █████ ███ ██ ███ █████████ ███████████
a
Bankruptcy laws should ██ ████████ ██ ████████ ███ ██████████ ████ ██████████ ████ ████ ██ █████ █████████ ██ █████ ██ ███████ ██████████
b
The claims of █████ █████████ ██ ████ ███ ███████ ███████ ██ █████ ███ ████ ██████ ██ █████ ███████ ████████ ████ █████ ███████ ██ ██████████ ███████████ ███ ████████████
We have no evidence that Jackson thinks the creditors with the largest amounts of money owed should be given the highest priority in bankruptcy proceeds. Maybe he thinks the creditors who were owed money earlier should get priority? We have no idea.
c
Bankruptcy law should █████ ████████ ██ ██████ █████████ ████ ███ ██████████ ██ █████ ██████ ██████████
This is best supported, because we know Jackson supports the traditional approach. The traditional approach argues that “bankruptcy law's sole task should be to make the largest possible asset pool available for settling creditors' preexisting contractually secured claims.” We have no reason to think Jackson believes the well-being of employees relates to making sure creditors get paid back.
d
Bankruptcy laws that █████████ ██████████ ██████ ██ █████████ ██ █████ ██ █████ ████ █████ █ ███████ ████████ ██ ███████
Jackson is in favor of the traditional approach, which he argues is “efficient.” So it wouldn’t make sense for him to want greater fairness at the expense of efficiency.
e
The legal system ██████ ████████ ██ █ ████ ██████████ ███████ ████ ██ █████ ██ █████ ████████████ ████ ███ █████ ██████ ████ ██████████ ███████ ██ ████ ██ █████████
Not supported, because Jackson doesn’t put any conditions on when bankruptcy law should function as a debt collection service. He would think that even if a corporation can stay in business, bankruptcy law should still function as a debt collection service.