New Feature: The Bankruptcy Word looks at the etymology of bankruptcy terms.  Matthew Knox is a first year associate in the bankruptcy section of Adair & Myers, PLLC, in Houston, Texas and enjoys learning about the exciting and storied world of bankruptcy. He can be reached at mak@am-law.com.

“Bankruptcy”

Where does the word itself come from? The textbook we used in my bankruptcy class in law school glossed over its origins in a way that hinted at mystery and controversy:

“[W]hether or not ‘bankruptcy’ derives from the Italian banca rotta or ‘broken [merchant's] table’… the clearest origins of United States bankruptcy law are to be found in England.”  (The Law of Debtors and Creditors, p. 107, 5th Ed. 2006, by current chair of the Congressional Oversight Panel and two-time Daily Show guest Elizabeth Warren, and Jay Lawrence Westbrook.)

Broken merchant’s table? Wait, what?

The story is that:

“In medieval Europe, a merchant who was unable to pay his bills was dealt with harshly: his creditors would (more…)