By: Donald L Swanson

“Jun 02 2025    The Solicitor General is invited to file a brief in this case expressing the views of the United States.”

That’s the latest entry by the U.S. Supreme Court on its electronic docket for Case No. 24-1062, The Hertz Corporation, et al v. Wells Fargo Bank, N.A., as Indenture Trustee. which case raises a bankruptcy question about the rights of a creditor.

Wells Fargo Will Win

My first reaction to that entry, before knowing anything about the details of the bankruptcy question, is this:

• Wells Fargo is going to win.

That’s because:

• the Solicitor General presents the views of the U.S. government to the U.S. Supreme Court;
• the U.S. government is the largest creditor in the entire U.S. bankruptcy system, being involved in many, many cases—e.g., as a tax claimant (Internal Revenue Service) or as a direct lender (Small Business Administration);
• so, views presented by the Solicitor General on bankruptcy questions are always skewed to favor the rights of creditors over rights of debtors;
• when the Supreme Court invites input from the Solicitor General on a bankruptcy question, it is asking for a biased view — a view it knows will favor the rights of creditors over debtors and other interested parties; and
• the Supreme Court commonly adopts the views of the Solicitor General in decisions on bankruptcy cases.

Article by Robert J. Mann

Two decades ago (in 2006), Ronald J. Mann published an article titled, “The Supreme Court, the Solicitor General, and Bankruptcy.”[Fn. 1]  What follows is a summary of Mann’s observations in Part IV of that article.

–Thesis

The thesis of the article is that the Supreme Court is resistant to “expanding the bankruptcy system to interfere with other legal systems”:  

• when other bodies of law are threatened, the Supreme Court uses “a strong interpretive principle” to narrow the substantive reach of the Bankruptcy Code; and
• in such circumstances, “the Court’s baseline perception is one of doubt.”

Mann explains:

• “My original view was that the Court simply has little interest in bankruptcy cases”;
• “Yet I found that view hard to reconcile with the pattern of the cases”;
• “Most of the cases that are conspicuously atextual point in a single direction, which supports bankruptcy skepticism rather than a lack of interest”;
• “my experience as a law clerk makes me think that the Justices are . . . just more sympathetic towards and familiar with the legal systems that govern foreclosures, criminal penalties, corporate governance and the like than they are with the importance of a coherent bankruptcy regime”; and
• “For example, Justice O’Connor had a personal experience with the foreclosure process, which might have disposed her to value finality. SANDRA DAY O’CONNOR & H. ALAN DAY, LAZY B x, 95 (2002) (providing a fascinating discussion of her family’s efforts to foreclose on a defaulting ranch hand who was given an interest in the family ranch).”

–Pervasiveness

Mann explains:

• “Other writers have noticed that the Supreme Court often defers to the government in bankruptcy cases in which the government is a party”;
• “but what they have not noticed is the pervasiveness of the Solicitor General’s role as a party and amicus in bankruptcy cases”;
• “the Solicitor General has appeared in about two-thirds of the Court’s cases interpreting the Bankruptcy Code (39 of 59 (66%) by my count)”; and
• “Of those 39 cases, the government was a party in 18 and appeared as an amicus in the other 21.”

–Cases Involving Secured Creditors

Mann adds:

• “By the early 1990’s, the Office of the Solicitor General began to participate regularly in cases presenting conflicts between the interests of secured creditors and other claimants”;
• From 1991 through 1997, “the Solicitor General appeared in all of these cases except one (five out of six), presenting argument on behalf of the secured creditors in each of the five, once as a party (BFP), but four times as an amicus”;
• as to “the effectiveness” of the Solicitor General’s participation in the secured creditor cases:
  • “Secured creditors have won all seven of the cases in which the Solicitor General has argued on their behalf, but only five of the nine cases in which the Solicitor General did not argue on their behalf”; and
  • “the only period in the Court’s history in which secured creditors have won reliably is the period in which the Solicitor General consistently appeared in the Court on their behalf.”

–“Relevant to the outcome”

So, Mann opines:

• “when the Solicitor General embarks on a practice of appearing to defend an interest in almost every case in which that interest is before the Court”; and
• “when the side that the Solicitor General defends prevails in every case”;
• “there is some reason to think that the Solicitor General’s appearance is relevant to the outcome.”

Further, the positions asserted by the Solicitor General in favor of the rights of creditors over rights of debtors “play to the Court’s”:

• “general skepticism about bankruptcy powers”; and
• bias toward interpreting the Bankruptcy Code “to permit as little interference as possible with the ordinary course of a secured creditor’s enforcement of its security interest.”

Conclusion

This is tiresome:

• the U.S. Supreme Court invites the Solicitor General to present the views of the United States on bankruptcy questions — even in cases where the U.S. is not a party;
• the Solicitor General always advances the interests of creditors over debtors and others in all such presentations; and
• the U.S. Supreme Court usually adopts the Solicitor General’s views on bankruptcy questions.

The bankruptcy system in these United States deserves better than that!  

———————–

Footnote 1.  The recommended citation for the article is: Ronald J. Mann, The Supreme Court, the Solicitor General, and Bankruptcy: BFP v. Resolution Trust Corporation, U OF TEXAS LAW, LAW & ECONOMICS RESEARCH PAPER NO. 84 (2006).

** If you find this article of value, please feel free to share. If you’d like to discuss, let me know.