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Article

Abstract

In a recent article in The Banking Law Journal, Professor John Dolan argued that the limit on claims by lessors established in Section 502(b)(6) of the Bankruptcy Code precludes a lessor from recovering a greater amount under a standby letter of credit.' Therefore, he maintained, although the lessor may draw down a greater amount under the letter of credit in accordance with the independence principle, a trustee or debtor in possession may recover any amount so received in excess of the amount the lessor could have recovered directly from the lessee/debtor under the Code. Although his argument is firmly grounded in bankruptcy policy, it skirts around bankruptcy law and requires a feat of judicial legerdemain to effectuate. Despite the willingness of a few courts to engage in that sort of judicial activism, absent amendment to the Code, there is no basis for a recovery action of the type suggested by Professor Dolan.

Disciplines

Bankruptcy Law

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