Thousands of judges and scholars have relied on the statement in the 1979 Supreme Court opinion in Butner v. United States that “property interests are created and defined by state law . . . unless some federal interest requires a different result.” Often, they cite to the statement as a policy constraint that elevates state property law over federal bankruptcy law. This Article posits that the Butner rule is not as broadly applicable as commonly believed. To do so, the Article surveys some notable uses and misuses of the Butner rule in the thirty-five years since the case was decided and concludes that so long as Congress clearly states a federal purpose for modifying a party’s state law property rights at the moment a bankruptcy case is filed, such a modification is permissible.
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