It is becoming more common for businesses to make arbitration agreements part of contracts. This, in turn, leads to bankruptcy court judges frequently deciding whether an arbitration agreement is valid. Is arbitration in the case of bankruptcy a way of getting around the administration of bankruptcy law? Or, is arbitration a legitimate type of contractual agreement that should be enforced?

What is the Purpose of Bankruptcy?

Understanding the place of arbitration begins by understanding the place of bankruptcy filings. There are two reasons for the bankruptcy code. First, to relieve a debtor and so allow that debtor to become a contributing member of the community once again. Second, to ensure that creditors do not lose everything and all creditors get as much as possible back. In theory, no one creditor can collect at the expense of other cre