Available at: https://ssrn.com/abstract=5647631 or http://dx.doi.org/10.2139/ssrn.5647631
Abstract:
This Essay, written for the “Who Governs Debt’s Dominion” symposium, looks back on Debt’s Dominion: A History of Bankruptcy Law in America as the twenty-fifth anniversary of the book’s publication nears. The Essay begins, in Part I, by briefly describing how Debt’s Dominion came about. Part II identifies and seeks to explain a striking decline in optimism about American bankruptcy law since Debt’s Dominion was first published. Part III explores a few of the major recent developments in consumer bankruptcy, small business bankruptcy, and large-scale corporate reorganization that I would have analyzed in the book if it were written today. Part IV briefly considers the impact of globalization and concludes the new epilogue.
Summary of David Skeel’s 2025 Epilogue to Debt’s Dominion
David Skeel’s new epilogue to Debt’s Dominion, written for the BYU symposium “Who Governs Debt’s Dominion,” revisits the arguments that made his 2001 classic the foundational account of American bankruptcy’s political economy — and measures what has changed in the quarter century since. Skeel finds, to his relief, that the book’s core narrative still holds: American bankruptcy law continues to oscillate between the creditor discipline of Hamilton and the populist mercy of Jefferson, brokered and sustained by the self-interested professionalism of bankruptcy lawyers. Yet, while the scaffolding endures, the mood, he writes, has darkened. The optimism of the 1978 Code’s “golden age” has given way to disillusionment — a system now dominated by insiders collecting tribute rather than reformers expanding relief.
I. From Hamilton and Jefferson to Visa and Warren
Skeel begins by returning to his book’s original dramatis personae: Hamilton’s pro-creditor nationalism and Jefferson’s agrarian debtor populism. In the 2005 BAPCPA reforms, Skeel sees their modern avatars — credit-card lenders like Visa and Mastercard as the new Hamiltonians, and Elizabeth Warren as the reincarnated Jeffersonian reformer from what was once staunchly creditor-friendly Massachusetts.
He recalls that Debt’s Dominion was born of a simple but powerful puzzle: why corporate law and bankruptcy had evolved as estranged disciplines, despite their shared concern with financial failure. The book bridged that divide, blending political history with legal theory, and situating bankruptcy within America’s larger narrative of economic democracy.
II. A Shift in Mood: From the 1978 Renaissance to Managed Decline
In Debt’s Dominion, Skeel likened bankruptcy’s modern history to a rock-star biography — early promise, decline, and triumphant comeback with the 1978 Code. But in 2025, he admits, the “promised land” has become congested. Where once bankruptcy liberated the distressed, it now serves those already in control. Chapter 11’s once-revolutionary “debtor-in-possession” financing has hardened into a near-monopoly market for incumbent lenders, dictating outcomes through restructuring support agreements and milestone-laden credit terms.
The system still works — Skeel cautions that “rumors of Chapter 11’s demise are premature” — but it has lost its moral shine. The insiders have taken over the promised land, and the pilgrims are paying rent to stay there.
III. Updating the Story: New Fault Lines in a Familiar Dominion
A. Consumer Bankruptcy and Race
Skeel highlights the surge of scholarship exposing how “neutral” bankruptcy rules reinforce racial inequality. Since Ferguson, scholars like Abbye Atkinson, Mechele Dickerson, and Pamela Foohey have shown that Black debtors disproportionately carry nondischargeable penal fines and fees, effectively reviving debtor’s prisons under a modern guise. He acknowledges that his own 2004 essay on the racial dimensions of credit was an early but limited foray, and that today’s research — extending back even to Rafael Pardo’s work on Bankrupted Slaves — adds a long-missing chapter to the social history of bankruptcy.
B. Small Business: The Subchapter V Revolution
The epilogue celebrates Subchapter V as a quiet triumph — the most successful reform since 1978. Where once the “new value” doctrine left owner-operators trapped by absolute priority, Congress’s 2019 Small Business Reorganization Act has, in Skeel’s view, “given small business a second chance without requiring them to buy it.” He praises Subchapter V’s pragmatic flexibility, noting its high plan-confirmation rates and its embodiment of the very populist spirit Hamilton feared and Jefferson championed.
C. Large Corporate Reorganization: The New Insider’s Game
In the realm of large cases, Skeel chronicles the continued erosion of managerial control — replaced not by democracy, but by domination. DIP lenders and private-equity sponsors now wield “contractual sovereignty,” using pre-packaged RSAs to dictate terms before the petition is filed.
He identifies three current flashpoints:
-
Venue Shopping: The old Delaware–New York rivalry now yields to judge-shopping in Houston and Richmond, where debtors can all but select their judge. Even after scandals, Skeel notes wryly, “nothing happened in Washington.” Delaware’s lobby remains as effective as ever — a living case study in Mancur Olson’s logic of concentrated interests.
-
Disproportionate Payouts: “Liability management exercises” (uptiers, dropdowns, and double-dips) and RSA fees allow favored creditors to jump the queue, sometimes with judicial blessing. He describes Serta Simmons as a rare judicial thunderbolt restoring fairness — though, as Skeel dryly observes, such thunder seldom strikes twice.
-
Mass-Tort Bankruptcies: From Johns-Manville to Purdue Pharma, bankruptcy has become the “social solution of last resort,” where mass tort defendants cleanse liabilities through non-debtor releases. The Supreme Court’s 2024 decision in Purdue barred such releases — but Skeel predicts, quoting a 1935 lament, that bankruptcy lawyers will soon find “new rituals” to circumvent it. The bar, he notes, “has too much at stake to abandon the practice”.
IV. The Third Era Marches On
In closing, Skeel reaffirms his tripartite history: (1) founding until the New Deal; (2) 1938–1978; (3) 1978–present. Despite globalization and reformist murmurs abroad — from the UK’s “restructuring plan” to Singapore’s importation of American judges — U.S. bankruptcy remains “debt’s dominion.” If change comes, Skeel suggests, it will be populist and homegrown, born of a future economic shock — not imported from London or Singapore.
Commentary: A Quarter Century of Dominion
Skeel’s retrospective, fittingly elegiac, reaffirms Debt’s Dominion as both history and prophecy. Like Bruce Mann’s Republic of Debtors, it locates bankruptcy at the moral center of the American experiment — a nation perpetually balancing punishment and mercy, contract and conscience.
To appreciate the scope of Skeel’s project, it should be read it alongside these complementary histories:
- Bruce Mann’s Republic of Debtors (2002) – a rich account of how early American bankruptcy intertwined with notions of honor, mercy, and civic trust. Mann shows that insolvency was once a moral—not merely financial—status.
- Scott Sandage’s Born Losers: A History of Failure in America (2005) and David Graeber’s Debt: The First 5,000 Years (2011) which situate debt within cultural and anthropological frameworks—why societies forgive, or refuse to forgive.
- Scott Berman’s When All Else Fails (2019) tracks how modern capitalism uses legal failure as a design feature.
- Foohey, Lawless, and Thorne’s recent Debt’s Grip (2025), which provides the empirical counterpart to Skeel’s political economy—a granular look at how ordinary Americans still live within that dominion, racialized and gendered as it may be.
Together these reveal that bankruptcy’s history is not linear progress but cyclical contest—a series of moral negotiations between failure and forgiveness.
For today’s practitioners, the lesson is both humbling and galvanizing. Bankruptcy remains the law’s most democratic institution — but democracy, Skeel reminds us, can be quietly bought out. Whether in the DIP market, Subchapter V courtrooms, or the trenches of consumer practice, the Hamiltonians still have their lobbyists. The Jeffersonians, as ever, must make do with their lawyers.
With proper attribution, please share this post.
Blog comments