Chapter 9 requires states to authorize any municipal bankruptcy filing. However, most state constitutions have a provision similar to the Contract Clause of the U.S. Constitution that prohibits passing any 'laws impairing the obligations of contracts.' The U.S. Supreme Court has foreclosed the argument that Chapter 9 bankruptcy violates the federal constitution. State courts have generally followed the Court's jurisprudence in interpreting the contract clauses of their own constitution. The Court's jurisprudence, however, is inconsistent with the text, purpose, and origin of the Contract Clause. This Comment argues that state courts should abandon this jurisprudence and adopt a much stricter interpretation of their own clause that is more in line with the Court's earlier decisions. Under this stricter interpretation, states violate their constitutions' contract impairment clauses by authorizing chapter 9 bankruptcy filings, except in the unlikely case that a municipality has no contractual obligations to impair.
State Contract Impairment Clauses and the Validity of Chapter 9 Authorization,
Emory Bankr. Dev. J.
Available at: https://scholarlycommons.law.emory.edu/ebdj/vol32/iss1/7