Available at: https://scholarship.law.ufl.edu/facultypub/1234
Abstract:
Toward the end of every semester that I teach bankruptcy, I let my students vote on which “non-traditional” insolvency regimes they would like to study, including municipal bankruptcy, sovereign bankruptcy, and financial institutions. What I am really trying to do is convey to the students that the default procedures and substantive rules in Chapters 7 and 11 of the U.S. Bankruptcy Code do not apply to all types of enterprises.
Summary:
In *Bespoke, Tailored, and Off-the-Rack Bankruptcy: A Response to Professor Coordes’s “Bespoke Bankruptcy”*, Professor Christopher Hampson expands Coordes’s taxonomy of “bankruptcy misfits” into three categories:
Off-the-rack bankruptcy – the default Chapters 7 and 11 structure, with liquidation as the constant background threat.
- Tailored bankruptcy – Congress begins with the Code and tweaks it for a specific group, e.g., Chapter 12 or Subchapter V.
- Bespoke bankruptcy – a separate statutory regime built from scratch for entities “too important to fail” or whose governance or public role makes the standard model unworkable, e.g., Chapter 9 municipalities, PROMESA territorial cases, or Dodd-Frank bank resolutions.
Hampson emphasizes that “misfit” status hinges on substantive differences, not whether the law is located in Title 11. Governance constraints (elected officials in municipalities, regulatory oversight in bank failures) often drive bespoke designs. He notes Coordes’s list of possible candidates—utilities, churches, nonprofits, public universities, mass tort defendants, and tribal corporations—and urges evaluating whether each needs tailoring or a fully bespoke regime. Tailoring is appropriate when standard Code processes suffice with moderate adjustments; bespoke is reserved for when off-the-rack solutions cannot work at all.
Commentary:
For consumer bankruptcy practitioners, this framework resonates with the Fourth Circuit’s Trantham v. Tate approach, which underscored the flexibility in Chapter 13 to craft nonstandard plan provisions so long as they comply with § 1322(b) and confirmation standards. Hampson’s “tailored” category suggests Congress could—and debtor’s counsel already can—create procedural or substantive adjustments within the Code to better fit certain consumer debtor populations. In other words, *Trantham* opens a door for “micro-tailoring” inside individual cases, while Hampson describes “macro-tailoring” by statute.
Potential “bespoke” or “tailored” consumer bankruptcy categories could include:
- Attorney Fee Only Bankruptcy – Somewhere between a Chapter 7 and a Chapter 13 case that allows for immediate filing of the bankruptcy without payment up-front of attorneys fees and then discharge once those have been paid. This has been haphazardly accomplished with bifurcated fee agreements, low-pay Chapter 13s and conversions.
- Student loan–heavy debtors – Tailored provisions to permit discharge or structured repayment without undue hardship litigation, potentially modeled on Subchapter V’s streamlined timelines and mediation focus. This includes the bespoke Buchanan provisions, which allow or continue enrollment in IDR plans.
- Medical debt bankruptcies – Tailored rules prioritizing preservation of access to care, limiting the impact on future insurance coverage, or limiting impact on credit scores due to the innocent nature of the debt.
- Gig economy/variable income debtors – Tailored income determination and plan modification rules that account for income volatility and avoid serial defaults.
- Elderly debtors – Bespoke or heavily tailored regimes that protect retirement income and simplify plan administration when debt structure is modest but repayment ability is constrained by age and health.
- Natural disaster victims – A bespoke chapter (or subchapter) providing extended plan moratoria, expedited lien stripping for uninhabitable homes, and coordinated FEMA/insurance claim handling.
- Home preservation–focused debtors – Tailored provisions expanding mortgage cure rights beyond § 1322(b)(5), deferred payment of non-exempt equity to unsecured creditors, requiring servicer transparency akin to online access following In re Klemkowski. The mortgage modification programs adopted by many bankruptcy courts across the country, including all three districts in North Carolina are tailored for this.
- Mass consumer fraud victims – Group Chapter 13 plans combining streamlined proof-of-claim defenses with coordinated recovery from common wrongdoers.
Consumer attorneys could, post-Trantham, experiment with nonstandard plan language to simulate these regimes in individual cases—e.g., a “Student Loan Chapter 13” provision requiring mediation and fixed interest amortization; or a “Disaster Recovery Chapter 13” with seasonal payment step-ups. The test will be whether courts view these as permissible tailoring or an impermissible rewrite of the Code.
If Congress takes up bespoke consumer bankruptcy, these categories could be codified much like Chapter 12 was for farmers and Sub V for small businesses—starting as an emergency measure and, if successful, becoming a permanent feature of the Code.
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