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.
Steven L. Schwarcz & Janet M. Link, Protecting Rights, Preventing Windfalls: A Model for Harmonizing State and Federal Laws on Floating Liens, 75 North Carolina Law Review 403-470 (1996)