U.S. Solicitor General: A POWERFUL AND BIASED Advocate Before the U.S. Supreme Court on Bankruptcy Issues (Deutsche Bank v. McCormick Foundation)

By: Donald L Swanson

The Acting Solicitor General is invited to file a brief in this case expressing the views of the United States [on whether to grant the Petition for Writ of Certiorari].

–From U.S. Supreme Court docket entry dated October 5, 2020, in Deutsche Bank v. McCormick Foundation (Case No. 20-8).  

Voluntary Briefing

The Petition for Writ of Certiorari in this Deutsche Bank case presents three complicated questions of bankruptcy law:

1. Whether the presumption against preemption of state law applies to creditor-rights claims once federal bankruptcy law is invoked.
2. Whether state fraudulent transfer laws are preempted as obstacles to the “purposes and objectives” of 11 U.S.C. § 546(e), under Merit Management Group, LP v. FTI Consulting, Inc., 138 S. Ct. 883 (2018).
3. Whether  Section 546(e) exempts certain fraudulent transfers from avoidance if executed via a bank as a conduit.

The Respondents’ opposing brief argues that, (i) none of the questions merits a review by the U.S. Supreme Court, and (ii) this case presents a poor vehicle for a review of the questions presented because an alternative ground for affirmance exists.

Meanwhile, three separate amici briefs have been filed by, (i) sixteen law professors, (ii) eight public law scholars, and (iii) eleven bankruptcy trustees.

Solicitation of Solicitor General’s Brief

The Solicitor General does not participate in the case.  Yet, the Supreme Court justices feel compelled to solicit the Solicitor General’s opinion on the matter—without specifying exactly which one or more of the three questions it is focusing on.  

–Solicitor General’s Bias

I recently published a blog article titled, U.S. Solicitor General: A Biased Advocate Before The U.S. Supreme Court On Bankruptcy Issues–Again (City of Chicago v. Fulton).  That article focuses on the Solicitor General’s persistent bias toward protecting the interest of secured creditors, since the U.S. of A. is the largest of all secured creditors in bankruptcy. 

In fact, the Solicitor General, while acknowledging its obligation to protect the interests of the bankruptcy system, makes no pretense at fulfilling that obligation when the interests of secured creditors are involved.

–A POWERFUL AND BIASED Advocate

In light of the Supreme Court’s solicitation to the Solicitor General quoted above, I’ve amended (for the present blog article) the title of that prior article to read:  “U.S. Solicitor General: A POWERFUL & BIASED Advocate Before the U.S. Supreme Court On Bankruptcy Issues (Deutsche Bank v. McCormick Foundation).”

Conclusion

How can this be?! How can such a powerful entity, with an aura of impartiality, hold such a strong bias and conflict of interest?!

Doesn’t the bankruptcy system deserve an unbiased advocate who promotes, exclusively, the best interests of the entire system?    

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