It’s been a hard year for cryptocurrency. The values of most cryptocurrencies, including major coins such as Bitcoin and Ethereum, have continued to tumble. In fact, the price of one stablecoin, which is a form of cryptocurrency tied to another currency, commodity or financial instrument, de-pegged from its cryptocurrency token and entered into a downward spiral. Ultimately, the stablecoin and the crypto token it was pegged to collapsed, erasing $18 billion of value with it.

The interface between federal bankruptcy law and similar state laws has a long history, going back to at least 1819, when the U.S. Supreme Court rules that a state insolvency law:

The interface between federal bankruptcy law and similar state laws has a long history, going back to at least 1819, when the U.S. Supreme Court rules that a state insolvency law:

“2 There is one inconsequential difference — § 1228(a) refers to debt ‘of a kind specified,’ while § 1192(2) refers to debt ‘of the kind specified.’” [Fn. 1]

This “inconsequential difference” quotation, from footnote 2 in the Fourth Circuit’s Cantwell v. Clearyopinion, is on the application of § 523 discharge exceptions to corporations and LLCs. The “inconsequential difference” quote, is both:

Bankruptcy – and the restructuring process – are challenging and complex endeavors, requiring a variety of tactics and resolution mechanisms. For the parties involved, financial expectations can be at odds with the reality of the situation, and knowing when to compromise and how best to proceed for your organization’s specific needs is essential.

The Supreme Court has agreed to hear a dispute between Mall of America and Transform Holdco LLC as to whether a lease Transform acquired at a bankruptcy sale can be challenged after that sale has closed. Sections 363(b)(1) and 363(m) of the Bankruptcy Code are at play here. Section 363(b)(1) generally permits a bankruptcy trustee, after notice and hearing, to use, sell, or lease property that belongs to the bankruptcy estate outside of the ordinary course of business.

Justice Stephen G. Breyer is now retired from the U.S. Supreme Court, serving from August 3, 1994, to June 30, 2022.

One of his legacies—and an exceedingly important one—is this: he has worked, successfully, to erase “public rights” from the lexicon of controlling bankruptcy law.

What follows is a summary of how “public rights” came to be part of that lexicon, and how Justice Breyer works to get it erased.

“PUBLIC RIGHTS” BEGINNING—Northern Pipeline

The case before the U.S. Supreme Court is MOAC Mall Holdings LLC v. Transform Holdco LLC, Case No. 21-1270.

The bankruptcy question upon which the U.S. Supreme Court granted certiorari is this:

The Bankruptcy Protector

In 2019, Congress enacted the Small Business Reorganization Act. This legislation created a new type of Chapter 11 reorganization under which certain businesses with total debts less than a certain threshold (currently $7.5 million) could reorganize. These provisions, known as Subchapter V eliminated certain requirements for confirmation of a reorganization plan and include other changes to make small business reorganization quicker and less expensive.

In a decision rendered on June 6, 2022, Justice Sotomayor authored the Supreme Court’s unanimous decision in the case Siegel v. Fitzgerald, holding that a statutory increase in United States Trustee’s fees violated the “uniformity” requirement of the Bankruptcy Clause set forth in Article I, § 7, cl. 4 of the United States Constitution, which empowers Congress to establish “uniform Laws on the subject of Bankruptcies throughout the United States.”1