The Bankruptcy Act of 1938, also known as the Chandler Act, expanded voluntary access to the

bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...

system in the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

and made voluntary petitions more attractive to debtors. It also gave authority to the

Securities and Exchange Commission The United States Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street crash of 1929. Its primary purpose is to enforce laws against market m ...

in the administration of bankruptcy filings. One effect was to remove

investment bank Investment is traditionally defined as the "commitment of resources into something expected to gain value over time". If an investment involves money, then it can be defined as a "commitment of money to receive more money later". From a broade ...

s from control of the corporate reorganization process by eliminating the equity receivership technique. Instead, a trustee was appointed by the bankruptcy court to oversee the reorganization process. The Bankruptcy Act, though now superseded by the Bankruptcy Code, remains an important interpretive tool for current bankruptcy law. Several United States Supreme Court decisions have interpreted the Bankruptcy Code by looking back to the history of the Chandler Act. Some of the most notable decisions include: * ''United States v. Whiting Pools, Inc.'', 462 U.S. 198 (1983), which justified the practice of requiring the IRS to return a bankrupt company's property under the Bankruptcy Code by reference to previous practice under the Bankruptcy Act. The Court wrote that Congress must have been aware of this previous practice and decided not to change it when it passed the Bankruptcy Code. * ''Johnson v. Home State Bank'', 501 U.S. 78 (1991), in which the Court looked to the legislative history and precedent of the Bankruptcy Act to interpret the term "claim" in the Bankruptcy Code. * ''Fidelity Financial Services, Inc. v. Fink'', 522 U.S. 211 (1998), in which the Court considered Bankruptcy Act's rules about and precedent interpreting avoidable preferences to resolve a similar question under the Bankruptcy Code. * ''Cohen v. de la Cruz'', 523 U.S. 213 (1998), in which the court relied on practice under the Bankruptcy Acts to interpret the non-dischargeability provisions of the Bankruptcy Code. The practice of using the Bankruptcy Act to interpret the Bankruptcy Code has been criticized by some bankruptcy scholars. They claim that this interpretive tool leads to unpredictable results, may ignore the intent of Congress, and confuses lower courts interpreting Supreme Court decisions.Gebbia, Karen (2000).
Interpreting the Bankruptcy Code: An Empirical Study of the Supreme Court's Bankruptcy Decisions
. 3 ''Chapman L. Rev.'' 173.

References

1938 in American law United States bankruptcy legislation History of bankruptcy law Repealed United States legislation 75th United States Congress {{US-fed-statute-stub