Review of The Chapter 7 Bankruptcy Trustee’s ManualABI Journal July 15, 1993
Following is from a review by Robert B. Millner of The Chapter 7 Bankruptcy Trustee's Manual (John Wiley & Sons, 1993), which was coauthored by Member of the Firm David Tatge.
This concise volume gives a thorough and well-researched explanation of Chapter 7 practice. The perspective is that of the Chapter 7 trustee; the format is that of a hands-on practice manual. The book is well-organized and well-written. Methodically, in thoughtfully conceived chapters and subsections, the authors treat the full panoply of questions — both practical and theoretical — that the Chapter 7 Trustee sooner or later must confront.
The book's greatest strength is its consistent fusion of practice advice and academic analysis; the authors explain what to do and set forth the legal precedent supporting their views together with contrary authority, if any. This approach makes the book an invaluable resource for Chapter 7 trustees, who often have scant resources at their disposal.
Take, for example, tenancy by the entireties property — a difficult subject. The authors, of course, advise that "the laws of some states exempt property held in tenancy by the entireties from all but the claims of joint creditors" (Section 8.6 of the Manual), and they set forth the various state-law versions of the exemption. More importantly, the authors provide a thoughtful discussion of the nature of the entireties tenancy, explain (and indeed makes sense of) the case precedent dealing with various state-law trustee as to the practical steps that should be taken to deal with and perhaps administer such property. And all this is just three and one-half pages!
Chapter 22 of the Manual — entitled, "Prosecuting the Estate's Causes of Action" — is a tour de force. In a few pages the ins and outs of alter ego actions are laid bare. Thereafter, fiduciary duty claims are concisely explained and a full complement of other potential actions are reviewed.
Refreshingly, the authors mince no words as where the law is and where they see it going. For example, they suggest in Section 22.13 that in an appropriate case a claim for breach of a director's fiduciary duty to creditors in failing to take a corporation into bankruptcy sooner could succeed — although attempts at such an action thus far have failed. On the other hand, as to lender liability claims, the authors state in Section 22.14 that "[v]irtually all lender liability actions by a debtor against a lender, whether filed as a claim affirmative defense to the lender's claim, or counterclaim, are ultimately lost." They advise, correctly, that "except in egregious situations, the Chapter 7 trustee should have serious reservations about pursuing such claims.
The Chapter 7 Bankruptcy Trustee's Manual is a valuable and needed addition to the bankruptcy literature. Unlike most bankruptcy texts — which are about the Code — this is a book bankruptcy practice and how to do it better. The trustee community, and all practitioners who deal with Chapter 7 cases, will benefit from it.