Last week Mark Roe presented a paper on the history of corporate bankruptcy law, "Three Systems of Bankruptcy —Or Is It Four?" (not up on the web yet) that I found interesting. There was no special law for corporations in 1750. There were few corporations too. Corporations became important in the U.S. with the advent of railroads, and with them, too came big bankruptcy problems. Not only did they go bankrupt, but the value of the assets would decline sharply if, say, a creditor could seize a crucial engine. The common law's answer was the equity receivership. The criticisms of this was that it allowed certain creditors, and even shareholders, to be favored. Roe's first era, the era of administration, began in 1938 with a federal statute that gave much power to the SEC. The second era, the dealmaking era, started in 1978 with the current statute, which tries to get the various parties to make a fair deal under the oversight of the court and the rules of priority. The third era, starting in the 1990s without any new statute, is the 363 "sale" era, where many or all of the assets are sold to the highest bidder, as with General Motors. The possible 4th era that has been creeping up is a return to the pre-statutory remedies, to
