Bankruptcy Courts in Transition Toward Debtor Rehabilitation

This article attempts primarily to cope with the so-called debtor relief provisions of the Bankruptcy Act rather than with its ordinary or straight bankruptcy provisions. The different emphasis upon liquidation in ordinary bankruptcy and rehabilitation in debtor relief proceedings justifies their separate treatment. It must be cautioned, however, that not only the philosophy but many of the administrative and procedural precepts of chapters I-VII of the Bankruptcy Act are incorporated, either by word or implication, into the debtor relief chapters. Moreover, most types of cases filed under the Bankruptcy Act are administered by the same personnel in the same court of bankruptcy. However ineffective and impractical it may be, the inevitable fact of the matter is that the bankruptcy court functions in the same environment and through the same operatives, whether confronted with an economic cadaver, in which event dissection and distribution are the order of the day, or with a yet viable but economically unsound subject, in which case either therapy or surgery, or both, may be required to restore economic health. So long as this superficial treatment of the serious economic woes of the nation's businesses and consumers continues to be the legislative prescription by which the bankruptcy courts are bound, it is obvious that no total dichotomy between the rehabilitative and dispositive functions of the court is advisable.