Some Functional Aspects of Bankruptcy

Abstract

THE case studies of the fifteen hundred New Jersey and Boston bankrupts which were made during the last two years 1 throw * Visiting Professor of Law, Yale School of Law; co-author of Cases on the Law of Management of Business Units (1931), Cases and Materials on the Law of Financing of Business Units (1931) and Cases and Materials on Corporate Reorganization (1931). The author wishes to express his indebtedness to Dr. Dorothy S. Thomas and Miss Emma Corstvet for many helpful suggestions and criticisms regarding the analysis of cases and presentation of data in this article. 1 The study in New Jersey, made from November, 1929-June, 1930, covered 597 of the 1275 petitions filed during the fiscal year ended June 30, 1930. The cases studied were taken from all parts of the District of New Jersey-rural as well as urban, small towns as well as larger cities and included approximately two-thirds of all those who filed their petitions during the period of the study. The study in Massachusetts included 910 of the 2900 (unofficial) petitions filed in the entire District of Massachusetts for the fiscal year ended June 30, 1931. No attempt was made to cover the entire state. Only cases arising in the metropolitan area of Boston, i.e., the counties of Suffolk, Norfolk, and Middlesex, were covered. About 70% of all those cases between October, 1930, and June, 1931, were taken. The study in New Jersey was carried on with the generous supervision and collaboration of Hon. William Clark of the United States District Court for the District of New Jersey. The Boston study was made possible only because of genuine and wholehearted cooperation on the part of the three distinguished Boston referees-Hon. Arthur Black, Hon. B. Loring Young, and Hon. Charles C. Cabot. Both the New Jersey and Boston projects were conducted jointly by the Department of Commerce, the Yale Law School, and the Institute of Human Relations of Yale University. Dr. W. C. Plummer of the Wharton School of Commerce represented the Department of Commerce in the New Jersey study; Mr. Victor Sadd in the Boston study. A report on the New Jersey study has been made by Dr. Plummer. See Causes of Business Failures and Bankruptcies of Individuals in New Jersey in 1929-1930, DOMESTIC COMMERCE SERIES No. 54, Publication of the Department of Commerce (Gov. Print. Off. 1931). For similar publications by the Department of Commerce see Credit Extension and Causes of Failure Among Philadelphia Grocers, TRADE INF. BULL. No. 700 (Gov. Print. Off. 1930); Credit Extensions and Business Failures, TRADE INF. BULL. No. 627 (Gov. Print. Off. 1929). Not all of the cases reported by Dr. Plummer are embraced in this report, and vice versa. Due to the presence of two field staffs cases were [329] occasionally covered separately. In addition the report of Dr. Plummer covers 42 cases administered by the Friendly Adjustment Bureau of the North New Jersey Credit Men's Association. For reports on the methods of investigation see Clark, Douglas and Thomas, The Business Failures

Empirical Legal Studies Before 1940: A Bibliographic Essay

“…Kritzer noted in this work was the excess use of credit by both individuals and by businesses, and frequent problems of poor record keeping by businesses that got into financial trouble (Douglas 1932;Douglas & Marshall 1932). Several aspects of the project focused specifically on individual ("wage earner") bankruptcies and debt issues.…”

“…Other important factors included medical bills, unemployment, and tort judgments against the debtor. Douglas also notes that some bankrupts had gotten into trouble through real estate speculation (Douglas 1933).…”

Imagining the Administrative State: Legal Pragmatism, Securities Regulation, and New Deal Liberalism

“…The realities of bankruptcy suggested the variety of circumstances that courts had to consider in their disposition of cases, particularly the need for adequate accounting as a condition for releasing businesses from their debts. 33 A second article used court records from 1,004 New Jersey cases to question some of the basic premises of bankruptcy law, which assumed that creditors, because of their interest in recouping their assets, would want to play a central role by electing trustees, examining bankrupts, and participating in other areas of bankruptcy proceedings. In reality, so few assets remained in most cases that it was not worth the time of creditors, many of them absentee, to take an active interest, and in the large majority of cases they did not even participate in the selection of a trustee.…”

Empirical Legal Studies Before 1940: A Bibliographic Essay

“…One of the themes noted in this work was the excess use of credit by both individuals and by businesses, and a frequent problem of poor record keeping by businesses that got into financial trouble (Douglas 1932;Douglas and Marshall 1932). Several aspects of the project focused specifically on individual ("wage earner") bankruptcies and debt issues.…”