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Author: Rafael I. Pardo
Date: Apr. 2021
From: Fordham Urban Law Journal(Vol. 48, Issue 4)
Publisher: Fordham Urban Law Journal
Document Type: Article
Length: 40,411 words
Lexile Measure: 1910L

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As the United States contends with the economic crisis triggered by the COVID-19 pandemic, federal bankruptcy law is one tool that can be used to resolve the financial distress suffered by individuals and businesses. When implementing this remedy, the question arises whether the law's application should be viewed as limited to addressing private debt matters, without regard for the public interest. This Article answers the question by looking to modern U.S. bankruptcy law's first forebear, the 1841 Bankruptcy Act, which Congress enacted in response to the depressed economic conditions following the Panic of 1837. That legislation created a judicially administered system that nationalized bankrupts' assets, some of which featured prominently in the business of slavery. This Article focuses on a specific episode from New Orleans, which at the time was the nation's third-most-populous city, had the nation's largest slave market, and had one of the nation's largest money markets. One of the bankruptcy cases commenced in that city involved the administration and sale of Banks Arcade, which was a premier commercial exchange for auctioning enslaved Black Americans. This history about how the federal administrative state restructured one component of the U.S. slavery complex should prompt critical reflection on how present-day bankruptcy law manages the fallout from a financial crisis. This Article concludes that courts have the authority to permit the public to advocate for its interests in distressed assets redeployed through the federal bankruptcy system.

Introduction 802 I. Building Bankruptcy into the Antebellum Federal Administrative State 809 A. The 1841 Act Bankruptcy Trust 811 i. The Business Trust Baseline 811 ii. The 1841 Act Bankruptcy Estate 813 iii. Appointment of the Bankruptcy Assignee 819 iv. The Powers and Duties of the Bankruptcy Assignee 822 1. Powers and Duties Similar to Those of a Normal Business Person 823 2. Powers and Duties Exceeding Those of a Normal Business Person 831 B. Nationalizing Financially Distressed Assets 835 i. The Purpose of the 1841 Act Trust 837 ii. Direction and Control of the 1841 Act Trust 846 iii. Residual Policymaking Under the 1841 Act 849 II. Building Enslaving Capacity into the Antebellum Administrative State 856 Conclusion 875


The United States, like much of the world, currently finds itself on the road to recovery following the severe financial crisis triggered by the COVID-19 pandemic. (x) When the national economy initially cratered, those adversely affected looked to the government for help. Congress fashioned new relief measures specifically meant to target the crisis at hand, such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act, (2) an economic stimulus package exceeding $2 trillion that, according to the U.S. Department of the Treasury, was intended to "provide[] fast and direct economic assistance for American workers and families, small businesses, and preserve[] jobs for American industries." (3) But Congress also relied on government programs predating the crisis, in some instances adding modifications responsive to the unique circumstances of the present situation. For example, the CARES Act made a few amendments to the Bankruptcy Code, (4) nearly...

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Gale Document Number: GALE|A663050692