Quote:
Originally Posted by natalie469
States cannot declare bankruptcy
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Quote:
Originally Posted by BobNJ1960
Not necessarily true. There is no legal recognition they can or cannot. That is why the law will end up tested in court soon.
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Give it up already. She beat you up badly.
States cannot file bankruptcy. Period.
Test cases? Are you serious?
That's so far off-base it's not even funny.
Congress is the only entity on Earth than can grant the right to file bankruptcy and the method by which it is done.
First, States are not persons and only persons can file bankruptcy.
Second, nothing in the bankruptcy code permits States to file, so States cannot file.
Finally, Congress could never grant States the right to file bankruptcy, because it conflicts with Article I Section 10 of the US Constitution and that law would never survive a legal challenge. A federal district court would shoot it down in a heartbeat. Motion for Summary Judgment. End of story. And after only 63 days. It would happen faster, but governments get 60 days to answer a complaint. An appellate court would stomp all over it and the Supreme Court would bury it forever.
Previously on this thread, I posted excerpts from US Supreme Court cases going back to 1880, I think was the earliest.
States cannot file bankruptcy. Period.
Article I Section 10 of the US Constitution prohibits States from both filing bankruptcy and annulling debts.
I'll re-post them so people stop acting stupidly.
If you want the Cliff Notes version, US Constitution Article I Section 10 bars a State from cancelling any debts by any means.
Congress cannot grant States the right to file bankruptcy, because it would conflict with Article I Section 10.
The US Supreme Court has provided the conditions for when a State may cancel or refuse to pay a debt, and that is when the terms of the contract are such that the State has surrendered
"an essential attribute of its sovereignty."
Absent that condition, States are obligated under Article I Section 10 to pay all debts which would bar States from discharging debts in a bankruptcy.
As the Supreme Court noted in
Blaisdell,
"A State could not 'adopt as its policy the repudiation of debts or the destruction of contracts or the denial of means to enforce them.'"
If a State cannot repudiate debts because Article 1 Section 10 of the Constitution prohibits it, then States could never file bankruptcy.
Nowhere is that more evident than in the US Supreme Court opinion
United States Trust Co. v. New Jersey, 431 U.S. 1, 16, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977)
If you want some history....
The Court recognized that "the power of a State to modify or affect the obligation of contract is not without limit," but held that "the objects of the Texas statute make abundantly clear that it impairs no protected right under the Contract Clause." El Paso v. Simmons, 379 U.S. 497, 85 S.Ct. 577, 13 L.Ed.2d 446 (1965)
Although the Contract Clause appears literally to proscribe "any" impairment, "the prohibition is not an absolute one and is not to be read with literal exactness like a mathematical formula." Home Bldg. & Loan Asso. v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413 (1934).
"One whose rights, such as they are, are subject to state restriction, cannot remove them from the power of the State by making a contract about them." Hudson Water Co. v, McCarter 209 U.S. 349, 357 (1908).
Yet private contracts are not subject to unlimited modification under the police power. The Court in Blaisdell recognized that laws intended to regulate existing contractual relationships must serve a legitimate public purpose. A State could not "adopt as its policy the repudiation of debts or the destruction of contracts or the denial of means to enforce them."
When a State impairs the obligation of its own contract, the reserved-powers doctrine has a different basis. The initial inquiry concerns the ability of the State to enter into an agreement that limits its power to act in the future. As early as Fletcher v. Peck, the Court considered the argument that "one legislature cannot abridge the powers of a succeeding legislature." It is often stated that "the legislature cannot bargain away the police power of a State." Stone v. Mississippi, 101 U.S. 814, 817 (1880).
This doctrine requires a determination of the State's power to create irrevocable contract rights in the first place, rather than an inquiry into the purpose or reasonableness of the subsequent impairment. In short, the Contract Clause does not require a State to adhere to a contract that surrenders an essential attribute of its sovereignty.
Here the Court pretty much stated the conditions, which is that so long as a contract does cause a State to surrender any part of its sovereignty, the contract cannot be breached.
And here's the final nail in the coffin:
As with laws impairing the obligations of private contracts, an impairment may be constitutional if it is reasonable and necessary to serve an important public purpose. In applying this standard, however, complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State's self-interest is at stake. A governmental entity can always find a use for extra money, especially when taxes do not have to be raised. If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.
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