Selling Out

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When bankruptcy policy competes with other federal and state regulatory policies, which should take priority? Bankruptcy law, provided it is used to save a struggling business from having to close its doors. Bankruptcy's supremacy, then, can preserve the debtor's going concern value, save jobs, and limit the collateral damage from a business failure. But should this bankruptcy supremacy apply only when the debtor is pursuing a traditional reorganization under chapter 11, or should it also apply when bankruptcy is used to bring about a quick sale of substantially all of the debtor's assets?

This Article addresses this question in the specific context of federal bankruptcy law's conflict with federal labor laws, and it does so in the context of recent coal mining bankruptcies. Coal mining companies have filed bankruptcy with the goal of shedding their labor obligations to current and retired miners, and they have been successful at doing so whether they have structured their bankruptcies as traditional reorganizations or as asset sales. While the end result may look similar-in both instances, the business line is continued in some shape-the process is quite different, especially as to the balancing offederal bankruptcy and labor policies. The Bankruptcy Code's balancing of these interests, properly interpreted, requires the debtor to allocate some of its bankruptcy-created value to its collective bargaining units-a requirement that debtors have managed to sidestep when they structure their bankruptcy as asset sales.

This finding has implications for bankruptcy asset sales broadly and for the role of bankruptcy judges in chapter 11. While judges should not try to draw a sharp distinction between traditional reorganizations and asset sales, they should enforce the creditor protections and distributional norms embodied in the Bankruptcy Code.