Recharacterization Doctrine Is Ripe For High Court Review

    July 2015

    When a bankruptcy court "recharacterizes" debt, it causes something the parties have identified as debt to be converted into equity. This article, by counsel J. Maxwell Tucker, reviews the split among federal circuit courts on the question of whether state law or federal bankruptcy law provides the correct rule of decision regarding recharacterization, which may present the US Supreme Court with an opportunity to eventually weigh in and clarify the proper source of the standards governing recharacterization.