CreditSlips

Many commentators have assumed that the Supremacy Clause of the federal constitution settles the issue. I don't think it is so cut and dry. Bankruptcy always starts with inputs from "applicable non-bankruptcy law," which generally means state law. This is the basic holding in Butner v. US. Thus, whether a manufactured home is treated as personalty or realty in bankruptcy--critical for the question of whether a mortgage on the trailer can be crammed down in Chapter 13--depends on state law.

The IMF will not file an amicus brief urging the U.S. Supreme Court to intervene in the pari passu litigation--for now. This would not have been news had the IMF's intent to file not been announced last week, causing a rally in Argentina's bonds. 

Already the Detroit bankruptcy is producing a interesting bit of litigation about the interaction between state and federal law. Federal bankruptcy law sets up this problem because among the requirements for a municipality to file for Chapter 9 bankruptcy is that the municipality:

Detroit's bankruptcy filing today is obvious grabbing some headlines. It's not clear, however, how much bankruptcy can do to fix Detroit. Bankruptcy is really good at dealing with problems created by overleverage.  If there's too much debt, a debtor, municipal, corporate or consumer, can use bankruptcy to slough it off.  Similarly, if the problem is some bad contracts outstanding, bankruptcy's got that covered too.