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73 Marq. L. Rev. 1 (1989-1990)
The Doctrine of Necessity and Its Parameters

handle is hein.journals/marqlr73 and id is 7 raw text is: MARQUETTE LAW REVIEW Volume 73 Fall 1989 No. 1 ARTICLES THE DOCTRINE OF NECESSITY AND ITS PARAMETERS RUSSELL A. EISENBERG* FRANCES F. GECKER** I. INTRODUCTION This Article gives form to a presently amorphous, but vital, legal con- cept: the Doctrine of Necessity (Doctrine). Skilled bankruptcy lawyers and judges often invoke this ill-defined Doctrine at the beginning of a reor- ganization case to authorize the postpetition payment of prepetition em- ployee wages, benefits and services when the failure to make those payments would be catastrophic. A general rule in bankruptcy reorganizations re- quires payment of prepetition debts to be made solely through a confirmed plan of reorganization. The Doctrine permits payment of prepetition debts prior to confirmation of a plan of reorganization. There is no reference in the Bankruptcy Code (Code) to the Doctrine. There is no case, on any level, which states under what circumstances the Doctrine may or may not be used. The Doctrine is, however, well-estab- lished in bankruptcy common law. When used properly, it is one of the most important tools at the disposal of bankruptcy judges. This is particu- larly evident in the early stages of cases involving Chapter 11 reorganiza- tions. Bankruptcy is a collective process, and the Doctrine comports with * United States Bankruptcy Judge, Eastern District of Wisconsin. ** Attorney, Jenner & Block, Chicago, Illinois. We appreciate the constant encouragement and counsel of Professor Douglas G. Baird, The University of Chicago Law School; the generosity of Chief Bankruptcy Judge Burton R. Lifland, Southern District of New York, with his time for discussion and in supplying case materials; the editing of Martha Decker Wolz; and the assistance of Chris Frank.

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