Title

Protecting Rights, Preventing Windfalls: A Model for Harmonizing State and Federal Laws on Floating Liens

Document Type

Article

Publication Date

1996

Abstract

This Article examines the conflict between state law which permits the creation of security interests in a debtor's after-acquired property--or "floating liens"--and federal bankruptcy law's potential cutoff of many of those security interests. This conflict arises in virtually every bankruptcy case. However, because of ambiguous statutory language and a failure of the jurisprudence conceptual center. This Article argues that using a model of a debtor in liquidation to analyze the cutoff of floating liens would balance the underlying policy considerations and make judicial outcomes more predictable.