I don’t normally write a "Dicta" column about purely legal issues. I suppose that’s because the original intent of this column was to give judges a forum with which to inform bankruptcy professionals and the public at large about "how things look from the other side of the bench," as it were. When it comes to legal issues, judges already have a ready forum—they simply publish opinions (or perhaps write law review articles or contribute to treatises). But two decisions out of the Second Circuit seem to deserve a little discussion here—and not so much for purposes of critiquing or lauding the legal analysis employed by that august circuit, but rather for the purpose of highlighting what seems to really matter in bankruptcy law today. One is Coltex Loop Central Three Partners L.P. v. BTSAP Pool Associates L.P., 1998 WL 90844 (2d Cir. Feb. 19, 1998). The other is Capital Communications Federal Credit Union v. Boodrow (In re Boodrow), 126 F.3d 43 (2d Cir. 1997). In Coltex, the court held that the bankruptcy court faced with a "new value" plan was required to terminate exclusivity in order to permit an "auction" of the equity. In Boodrow, the court held that a debtor who is current on a consumer debt secured by property is not required to execute a reaffirmation agreement as a precondition to retaining the property. Both are important cases. Coltex, of course, is important to chapter 11 practitioners who have, over the years, closely followed the "new value" debate as it has been waged in the circuits. The polar extremes are represented by the Ninth Circuit’s decision in Bonner Mall and the Seventh Circuit’s decision in 203 North LaSalle. Boodrow, meanwhile, is the Second Circuit’s foray into the question whether a "fourth option" exists for consumer debtors under §521(2). It joined the position of the Fourth Circuit in Belanger and the Tenth Circuit in Lowry Federal Credit Union v. West in concluding that, at the very least, §521(2) mandates only that a debtor state his or her intention, not that the debtor also "follow through" with that intention (the Ninth Circuit has since joined that side of the dispute in In re Parker, 1998 WL 113872 (9th Cir. March 17, 1998)). The Fifth, Eleventh and Seventh Circuits have taken the other side of the issue, concluding that a debtor has but the three options listed in the statute, and can be compelled not only to elect but also to "follow through" with the stated intention. Their cases are Johnson (Fifth Circuit), Taylor (Eleventh Circuit), and Edwards (Seventh Circuit). I have no intention of evaluating the Second Circuit’s analysis of either of these issues in its decisions (though it is tempting to do so). Nor do I intend to declare my position on these issues. What I find intriguing about these two cases is that one is perceived to be a "big case" issue, affecting millions of dollars of credit, while the other is perceived to be another one of those esoteric consumer law issues involving a car. One case interests the lawyers handling reorganization cases, presumed to be the "heavy hitters" in bankruptcy. The other case interests those consumer lawyers that hang around the meeting room used for first meetings of creditors and who show up on the judge’s consumer docket. In many cities (especially the larger ones), the lawyers interested in Coltex barely know the lawyers interested in Boodrow. And in the medium-sized cities where they are likely to know each other, one often detects a certain elitism by which one group distinguishes itself from the other. In the smaller communities, of course, the same lawyers are doing everything, but then again, the big cases tend, for the most part, to bypass the smaller communities. Of course, the bankruptcy judge in all of these communities sees the entire spectrum of the bar, but the judge, too, may easily succumb to the same bias that only the "big case" lawyers are doing the "important" bankruptcy stuff. Yet just a little bit of rough calculation confirms a comment that Judge Keith Lundin made in passing a few years ago at an NCBJ conference—reaffirmation (and many other consumer law issues, for that matter) is big business. Consider this: last year, more than 1.4 million bankruptcy cases were filed nationwide. Of that number, less than 2 percent, or no more than 26,000 cases, were chapter 11 filings. The balance was consumer cases, and the majority of those cases were chapter 7 cases. The Administrative Office of the U.S. Courts figures show that roughly 950,000 of those cases were chapter 7 filings involving individuals. Assume that the majority of those individuals who filed owned an automobile. Let’s just say 500,000, to be conservative. That’s at least 500,000 vehicles, virtually all of which we can safely assume were financed with somebody, brought into the bankruptcy process. Let’s further assume an average indebtedness of $10,000 per vehicle. You might quibble with that number, but these are very rough calculations, the sort you could do in your head while you’re sitting in the back of the courtroom waiting for your case to be called. That means that chapter 7 bankruptcy filings just for one year affected about $5 billion worth of consumer automobile credit in the United States. That is hardly "chump change," as a friend of mine might put it. If we factor in the additional numbers of vehicles whose financing is affected by those who choose not to file chapter 7 but instead opt for chapter 13 (where they can effectively force a refinancing on the debtor’s terms—albeit limited by Rash), the number will begin to approach $10 billion. Even if we were to focus only on that portion of the indebtedness that might be directly affected by reaffirmation, i.e., the potential deficiency claim, which we might estimate to be, say $1,000 per vehicle (and that number is probably low), we are still talking about a $500 million issue for the consumer auto finance industry and the debtors who rely on chapter 7 to discharge their debts. Resolving the split in the circuits is an issue of vital importance to these constituencies, one involving many millions of dollars—which is why I found it so disappointing that the Supreme Court denied certiorari in Boodrow just recently. Of course, Coltex hardly involved "chump change" either. At issue there was a claim of $7.2 million. At that rate, it only takes another 70 or so such cases to make this a $500 million dollar issue. But I haven’t seen very many such cases on my docket of late. The massive real estate bust that clogged the courts in Texas in the 1980s has been replaced by a robust economy in most parts of the state. The reaffirmation questions, on the other hand, seem to crop up all the time. The other day, for example, a bank argued that, under the applicable Fifth Circuit precedent (Johnson), it really didn’t matter whether the debtor was current on her homestead payments or not (hmmm—let’s see, how many of those chapter 7 cases involved real estate mortgages, and what’s the average mortgage?). The failure of the debtor to reaffirm the debt meant that bankruptcy itself provided a sufficient default to justify their posting the property for foreclosure (the debtor retorted, incidentally, that it did state its intention to reaffirm, but the creditor never followed through with a reaffirmation agreement, so what could it do?). If that creditor is right, then creditors can extract virtually any terms they desire out of chapter 7 debtors—shorter terms, higher interest rates, new default remedies—as a pre-condition to making a reaffirmation agreement that debtors must have or face losing their homes. And what if the court decides not to approve the reaffirmation agreement after all? In my 10-plus years on the bench, I have developed a whole new respect for the consumer bar (both creditor and debtor). The issues with which they must grapple are complicated and complex (as the conflicting circuit court decisions bear witness), and the economic impact of what they do washes throughout the economy. No wonder the debate in Congress over current consumer bankruptcy legislation is so fierce. As the consumer bankruptcy lawyers already know, there is a lot at stake in this area of the law, and the answers do not come easy. My friends in the profession who handle the "big cases" are, most certainly, some of the most brilliant and creative lawyers I know, and they are hardly denizens of a backwater. But should you find yourself in the back of the courtroom, waiting for your big case to be called while the judge is fretting over the legal vagaries surrounding some debtor’s right to keep his house or car, you might try tuning in for a bit. You might learn something.