This Comment examines the use of motions for substantive consolidation or to amend the caption as a means to consolidate the assets of a non-debtor with those of a debtor. The author examines two conflicting bankruptcy court decisions, one of which permitted such consolidation, thus making the non-debtor an involuntary debtor via a summary proceeding, without providing statutory protections normally afforded involuntary debtors, and another which refused to permit consolidation of non-debtor and debtor assets and liabilities. The author discusses the constitutional and statutory protections which apply to non-debtors in these circumstances, as well as the procedural safeguards that exist beyond those afforded by bankruptcy motion practice and, in conclusion, questions the use of these motions.
Substantive Consolidation: The Back Door to Involuntary Bankruptcy,
San Diego L. Rev.
Available at: https://digital.sandiego.edu/sdlr/vol23/iss1/8