28 U.S.C. § 157(b)(5) provides: “personal injury tort and wrongful death claims shall be tried in the district court in which the bankruptcy case is pending, or in the district court in the district in which the claim arose”
In other words, “personal injury tort” and “wrongful death” claims cannot be tried by a bankruptcy court.
The U.S. Supreme Court does not like the Bankruptcy Code. It never has. Two examples are:
Mass torts and resulting litigation are a reality of life in these United States.
But one of the truly shocking things about mass tort litigation, in recent times, is this:
- judicial delays override the wishes of mass tort victims for prompt payment of negotiated amounts.
A current example of such delays is the Boy Scouts confirmed bankruptcy plan.
Chronology
Here is a short Chronology of the Boy Scouts bankruptcy plan—and the lapse of more than three years since confirmation without a final resolution:
The Uniform Law Commission (“ULC”) is the same organization that brought us the Uniform Commercial Code, the Uniform Trust Code, and other “Uniform” state laws.
The ULC is now offering a Uniform Assignment for Benefit of Creditors Act (the “Uniform ABC Act”).
The new Uniform ABC Act codifies the common law of ABCs. Such common law has its foundation in the law of trusts: i.e., debtor is the trustor, assignee is the trustee, and debtor’s creditors are the beneficiaries.
When state legislatures consider a legislative bill, it’s important that they hear from stakeholders who would be affected by that bill.
Important ABC Stakeholders
When faced with a legislative bill on assignment for benefit of creditors (“ABC”), its important that legislatures hear from a variety of stakeholders, including this important group:
Recently, the U.S. Supreme Court denied certiorari in two cases involving bankruptcy questions:
An assignment for benefit of creditors (an “ABC”) under the common law is an out-of-court tool for liquidating a business debtor’s assets in an efficient and credible manner.
Such a common law tool has been used, effectively and frequently, for many years in such states as Illinois and California.
Despite the out-of-court nature of an ABC under the common law, courts can still be enlisted to resolve discrete issues that may arise. Here is an example of a court’s involvement, within an ABC under the common law, to resolve an issue of compensation for the ABC assignee:
Here’s a curious thing:
- an advisory opinion from a U.S. Circuit Court of Appeals on an issue for which there is no controversy and that is mostly academic.
That’s exactly what we have in In re Whittaker Clark & Daniels, Inc., Case Nos. 24-2210 & 24-2211 (3rd Cir., decided September 10, 2025)(see first concurring opinion).##
No Controversy
Assignments for benefit of creditors (“ABCs”) and receiverships have been utilized effectively for centuries under the common law, side-by-side as separate and distinct and complementary remedies for liquidating assets.
Differences
Differences between the two are that:
In a recent decision, Deputy High Court Judge Gary CC Lam dismissed an application to strike out an unfair preference claim brought by the liquidators of RZ3262019 Limited. The judgment provides a significant analysis of issue estoppel, particularly on the novel question of how an issue is characterised when a foreign court has applied a different, higher standard of proof.
Background