The economic turmoil of the Great Depression led to additional bankruptcy legislation, in particular, the Bankruptcy Acts of 1933 and 1934. The Supreme Court decision, the Court, revealed that the main purpose of bankruptcy laws was to offer debtors a fresh start from financial burdens. Article I of the United States Constitution, sec. Uniform laws on the subject of bankruptcy in the United States. The 1867 Act introduced the concept of a composition agreement into American bankruptcy law.
The composition agreement was the predecessor of the reorganization plan under current bankruptcy law. For the composition agreement to be binding on creditors, the consent of creditors was required by a majority in number and three quarters of the value of the claims. In addition, for the first time under the 1867 Act, the debtor could apply for exemptions from state law. The 1898 Act included many provisions aimed at making the administration of the bankruptcy estate more efficient and the distribution of the debtor's assets to creditors more equitable.
Under the 1898 Act, federal district courts acted as “bankruptcy courts.”. District courts appointed “bankrupt arbitrators” who did much of the judicial and administrative work. Arbitrators were compensated in the form of fees until 1946, when that changed to a salary base. Creditors had the power to elect trustees and creditor committees.
The trustee could prevent preferential and fraudulent transfers. The confirmation of a composition agreement rather than liquidation required the consent of the creditors by a majority in number and a majority in the value of the claims, and court approval because it was in the best interest of the creditors. The 1898 Act contained more generous forgiveness provisions for the debtor than in previous bankruptcy legislation, but allowed the debtor to seek exemptions only under state law and provided for cases of voluntary and involuntary bankruptcy. Amendments to the Chandler Act to the Bankruptcy Act of 1898 Among other things, the Act of 1898, as amended by the Chandler Act, included the concepts of classifying claims into settlement plans, reduction, cases of voluntary and involuntary bankruptcy, the appointment of trustees, the modification of both guaranteed and unguaranteed claims.
Federal Judges and Bankruptcy Amendments Act of 1984 (BAFJA) In 1982, the United States Supreme Court restricted the jurisdiction of the bankruptcy court in Northern Pipeline. In ruling that the 1978 Act unconstitutionally granted powers reserved to article III judges to judges who did not. Marathon's decision led to the enactment of the BAFJA. The BAFJA converted the bankruptcy judges of each judicial district into a unit of the United States district court for that judicial district, granted bankruptcy jurisdiction to the district court, created the concept of “basic”, “non-essential” and “matters related”, and authorized district courts to refer the Bankruptcy exercise.
Jurisdiction before bankruptcy courts. In all judicial districts, district courts have referred the exercise of bankruptcy jurisdiction to bankruptcy courts to the extent permitted by law. BAFJA also added a new section to the Bankruptcy Code related to the rejection of collective bargaining agreements. The amendments to the BAPCPA also make it possible to appeal directly to the court of appeal in certain circumstances; add the fishing family to chapter 12, make chapter 12 permanent and create a new chapter 15 for cross-border insolvencies.
The BAPCPA has given rise to an enormous amount of litigation to interpret its meaning. The evolution of bankruptcy law in the United States can be divided into two periods. In the first period, which covers most of the 19th century, Congress enacted three laws in the wake of financial crises. In all cases, the law was repealed after a few years, amid allegations of high costs and corruption.
The second period begins in 1881, when associations of merchants and manufacturers united to form a national association to push for a federal bankruptcy law. Unlike previous bankruptcy law lawsuits, which were largely driven by crises, the late-19th century demands for bankruptcy law sought a permanent law suited to the needs of a commercial nation. In 1898, the Act was enacted to establish a uniform bankruptcy system, and the United States has had bankruptcy law ever since. .