The Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) was implemented in order to prevent debtors from unjustly shielding value in their estate from deserving creditors and thus abusing the functionality of the federal bankruptcy system. Specifically, one problem perceived to be very prevalent was a practice by individual debtors who would seek to avoid the stringent guidelines of the “means test” in Chapter 13 cases by running for the protection of the more relaxed standards in Chapter 11 cases. The BAPCPA Amendments to section 1129 of the Bankruptcy Code were adopted to institute stricter standards in Chapter 11 proceedings and prevent abuse in order to curtail this chapter shopping of debtors between Chapter 11 and Chapter 13. However, there is no indication that these amendments within the BAPCPA were enacted with the purpose of applying equally strict regulations to Chapter 11 debtors as well as debtors in Chapter 13 cases.
This memorandum will first address the roots of this problem based in the statutory law and then look to the method by which the drafters of the amendments sought to reach a solution to this chapter shopping problem. More importantly though, it will be seen how this attempted solution faired practically in the case of In re Roedemeier, how the court interpreted the purpose of the amendments, and the impact that this interpretation will have on future individual debtors in Chapter 11 cases. Finally, it will be shown that the bankruptcy court ultimately reached the best possible conclusion, serving the purpose of benefiting debtors and creditors while eliminating the abuse of chapter shopping that was so prevalent before the BAPCPA’s enactment.