BANKRUPTCY AND THE ENTITLEMENTS OF THE GOVERNMENT - WHOSE MONEY IS ITANYWAY

A debate between two groups of scholars has dominated bankruptcy schol arship for the past decade. The first group, often referred to as the creditors' bargain theorists, argues that creditors' agreements with d ebtors create entitlements to payment; the proper role of the bankrupt cy system, therefore, should be to benefit creditors by enforcing rule s to which creditors would have agreed before bankruptcy. The second g roup of scholars contends that the goals of the bankruptcy system shou ld not be limited to the interests of creditors. Instead, they maintai n that the bankruptcy system, as a part of our country's wider system of social protection, should further a variety of social interests. Pr ofessor Mann joins the debate by providing a theoretical justification for the position that the bankruptcy system should pursue distributiv e goals beyond the enforcement of the creditors' bargain. Specifically , Professor Mann examines principles of distributive justice and expla ins that the government's role in creating and supervising the bankrup tcy system entitles it to any value created by that system above what would have been created by state-law remedies. Focusing on utilitarian and autonomy-based perspectives, he suggests that creditors are entit led only to what they could have expected to receive in the absence of a bankruptcy system, and that the government may use any additional v alue to further any of its legitimate interests.