A Decedent’s Estate is Barred from Filing Bankruptcy

(Excerpt)A “person” that “resides or has a domicile, a place of business, or property in the United States, or a municipality” is generally eligible to be a debtor in a bankruptcy case under title 11 of the United States Code (the “Bankruptcy Code”). The definition of a “person” under the Bankruptcy Code includes “individual, partnership, and corporation.” Courts, however, have interpreted the definition of “person” broadly to include groups not explicitly mentioned in the statute. Consequently, a decedent’s estate, which is not expressly identified as a person under the Bankruptcy Code, may nevertheless argue that it is eligible to be a debtor.This article explores why courts have concluded that a decedent’s estate is ineligible to be a debtor. Part I analyzes the arguments made in support of a decedent’s estate being eligible to be a debtor and summarizes bankruptcy courts’ rationales for rejecting these arguments. Part II reviews the congressional reports and secondary sources and policy reasons that courts look to when concluding that a decedent’s estate is not a “person.” Part III explains the limited circumstances in which a court has previously held a decedent’s estate eligible for relief under the Bankruptcy Code. Finally, Part IV of this article examines the risk incurred by counsel who files for bankruptcy on behalf of a decedent’s estate.