Cover

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Title Page, Copyright, Series Page, Dedication

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pp. i-vi

Contents

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pp. vii-viii

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Foreword

Walter Shapero

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pp. ix-x

Bankruptcy, with its courts, judges, and practitioners, along with debtors, small and large, individual and corporate, and all those devoid of means but not hope, has come to occupy a more and more significant place in the national economy and the body politic. In doing so, acting together, they represent the embodiment, effectuation, and fulfillment of the age-old...

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Acknowledgments

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pp. xi-xiv

This book was a long time in the making. I must first acknowledge and thank the Bankruptcy Committee of the Historical Society of the United States District Court for the Eastern District of Michigan, which commissioned this book. In particular, I must single out the contributions of Judge Walter Shapero, I. William Cohen, and Wallace Handler...

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Introduction

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pp. 1-10

On July 18, 2013, lawyers representing an emergency manager appointed by Michigan’s governor to supervise Detroit’s financial affairs filed a petition for bankruptcy for the city in the United States Bankruptcy Court for the Eastern District of Michigan. In the mid-twentieth century, Detroit was the center of America’s automobile industry, a manufacturing powerhouse...

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1. Bankruptcy in the Nineteenth Century

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pp. 11-20

Although bankruptcy law is now entrenched within the American legal system, this was not always so. Indeed, although Article I, Section 6 of the Constitution gives Congress the authority to establish uniform bankruptcy laws, it did so only fitfully and over great opposition until 1898. However, an examination of the evolution of American bankruptcy law...

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2. The Early Days of the Bankruptcy Act, 1898–1919

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pp. 21-38

Although President William McKinley signed the Bankruptcy Act into law in early July 1898, it did not become effective until the Supreme Court approved court rules for its implementation, which did not happen until November of that year. Nonetheless, district judges around the country scrambled to appoint referees to oversee the new cases. Unlike the seven...

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3. The Bankruptcy Court and the Development of the American Automobile Industry, 1900–1925

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pp. 39-52

Automobile manufacturing was America’s most dynamic business at the beginning of the twentieth century, and nowhere else in the United States did more hopeful new car makers try to start a business than in Detroit. A total of 239 new manufacturers entered Detroit’s automobile industry between 1897 and 1933; 232 of those companies had disappeared...

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4. Paul King and the Making of the Modern American Bankruptcy Courts

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pp. 53-70

As originally conceived, bankruptcy law was practiced before part-time officials in private offices often located far from the federal courthouse. In the early twentieth century, especially, bankruptcy courts were commonly criticized for lax administration, cronyism, and corruption. Paul King saw greater potential in the courts. No one in the first half of the twentieth century...

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5. The Bankruptcy Court in the 1940s and 1950s

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pp. 71-84

Paul King’s death in 1942 marked the end of a period of innovation and expansion of bankruptcy law and administration. The 1940s and 1950s were a relatively quiet time for the bankruptcy courts, both in the Eastern District of Michigan and nationally. The years of World War II saw the full engagement of America’s economic capacity. The number of bankruptcy...

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6. The 1960s and 1970s: George Brody and the End of the Administrative Era

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pp. 85-96

The bankruptcy court that Walter McKenzie left when he retired in 1960 was in important ways a significantly different place than the one he joined in 1943. For one thing, it was a much busier court. New case filings in the Eastern District in 1960 totaled 2,915 (and would increase to 3,720 in 1961), more than five times the 562 cases filed in 1943.1 The growing...

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7. The 1978 Code: Bankruptcy Comes of Age

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pp. 97-104

By 1970, bankruptcy courts across the United States faced ever-growing caseloads, fueled by the postwar expansion of the American economy and the related rise of consumer credit. Nationally, annual personal bankruptcy filings, which had remained below 20,000 as late as 1949, increased to 131,402 by 1960 and 178,202 by 1970 (Skeel 2001, 137). Case filings in the...

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8. Scandal Envelops the Court

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pp. 105-112

Aside from certain mega-cases in the Southern District of New York and the occasional celebrity filing, bankruptcy courts generally attract little media attention. However, on December 6, 1980, the Detroit News reported that the bankruptcy court in Detroit was under investigation by the FBI and that the way in which new cases were assigned to judges was the central...

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9. Fallout from the Scandal: The August Trial

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pp. 113-124

As noted earlier, the Bankruptcy Code’s all-new Chapter 11 provisions were a boon for lawyers, providing not only more work but also new kinds of legal work and larger fees for bankruptcy specialists. This was true for no one more so than Irving August and his firm, August, Thompson, Sherr, Clarke & Schafer. Not only was the August firm among the...

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10. Chapter 11 and the Heyday of Business Bankruptcy in the Eastern District of Michigan

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pp. 125-140

Of all the changes the 1978 code brought about in bankruptcy practice, none was more innovative or had a greater impact than those in Chapter 11,1 the all-new provision for court-supervised business restructuring. The keystone of the new law was the creation of the “debtor-in-possession.” The notion of the appointment of a trustee for all but the most...

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11. Bankruptcy in the Northern Division

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pp. 141-154

Although Congress divided the Eastern District of Michigan into Northern and Southern divisions in 1894, the Northern Division did not have its own distinct existence until the 1960s (although Frank Picard maintained his home in Saginaw and presided over the division’s docket— together with a full Detroit caseload—after his appointment in 1939)...

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12. The Court in the Consumer Bankruptcy Era

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pp. 155-166

For bankruptcy officials and practitioners, one of the many successful effects of the Bankruptcy Code was a dramatic improvement in the general and professional image of the bankruptcy courts. This was particularly important in the Eastern District of Michigan, where it may have helped offset the stigma of the scandals of the early 1980s. The local media...

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13. The City of Detroit Bankruptcy Case

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pp. 167-200

It can be said without hyperbole that no American city ever rose so high or fell so far as Detroit. At the beginning of the nineteenth century, Detroit was the thirteenth largest city in the United States with almost 286,000 residents.1 Its primary businesses were the manufacturing of stoves, railroad cars, pharmaceuticals, and cigars. However, within a few short years...

Appendix 1. Referees and Judges of the Court

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pp. 201-206

Appendix 2. Places of Court

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pp. 207-210

Notes

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pp. 211-232

Bibliography

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pp. 233-238

Index

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pp. 239-247

Image Plates

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