The Impairment of Secured Creditors’ Rights in Reorganization: A Study of the Relationship Between the Fifth Amendment and the Bankruptcy Clause

Abstract

Some commentators and courts have argued that the takings clause of the fifth amendment limits congressional power to interfere with property rights in bankruptcy proceedings. In this Article, Professor Rogers argues to the contrary that, at least with respect to prospective bankruptcy legislation, the bankruptcy clause itself and not the fifth amendment limits congressional bankruptcy power. His view derives from nineteenth and twentieth century case law, particularly cases assessing the validity of restraints on secured creditors' foreclosure rights, and from the theoretical difficulty of distinguishing between supposedly protected property rights and supposedly unprotected contract interests. Professor Rogers also sharply criticizes the Supreme Court's analysis in the recently decided Security Industrial Bank case, which concerned the extent to which fifth amendment principles limit retroactive application of bankruptcy legislation.