Earlier this month, Hughes Satellite Systems, the satellite broadband arm of EchoStar, filed for Chapter 11 bankruptcy. The company owed $1.5 billion in bonds that had just come due, and rising competition from newer satellite networks made it impossible to keep up. So the company made a big, formal decision: file for bankruptcy and restructure.

Here's the thing about a decision like that: it doesn't happen by accident. A company can't just have some random employee decide to file for bankruptcy on a whim. It takes clear, deliberate authorization. Someone has to actually have the power to make that call, and it has to be spelled out.

Turns out, the exact same rule applies to regular people. And this week, an attorney taught us something about it that genuinely surprised us.

This Week's Legal Insight

Let's talk about Power of Attorney again, because there's a detail most people never think about: in many states, if you want your agent to be able to file bankruptcy on your behalf someday, you can't just assume they have that power. It has to be written into the document, clearly and specifically.

Tennessee is a great example of this. Tennessee law lays out a list of specific powers you can choose to give your agent, and bankruptcy is one of them. If it's not checked, written, or included, your agent legally cannot file for bankruptcy for you, even if they're your spouse, your child, or someone you trust completely. The state simply won't accept it.

At first, this feels strange. Isn't a POA supposed to mean “this person can handle things for me if I can't”? Turns out, not automatically, and not for everything. Some powers are considered big enough, consequential enough, that the law wants to see your name specifically attached to the decision to hand them over. Bankruptcy is one of them, right alongside things like making gifts of your property or changing your beneficiaries.

It's not that it's rare or unusual to need this. It's that the law wants to make sure you actually meant to give someone that much control, not that they just happened to have a general POA and assumed it covered everything.

A Family, Just to Make It Real

Mr. Chen, a small business owner in Tennessee, sets up a general Power of Attorney naming his daughter as his agent, mostly so she can handle his bills and bank account if he's ever hospitalized. A few years later, Mr. Chen has a stroke, and his business, burdened by debt, needs to file for bankruptcy protection to survive. His daughter assumes she can handle it. She can't. Because the original POA never specifically granted bankruptcy authority, the court won't accept her filing. What should've been a quick, protective move turns into weeks of legal delay, all because one specific line was never added.

The Analogy

Think about how a company's board has to formally vote to authorize something as big as a bankruptcy filing. One manager can't just wake up one day and decide the whole company is filing for Chapter 11. That kind of power has to be explicitly given, on the record, by the people who actually have the authority to give it.

A Power of Attorney works the same way. General trust isn't the same as a specific, written grant of authority. If you want your agent to have the power to make a decision that big, you have to actually write it down, not just assume it's included because you like and trust the person.

The Takeaway

Some powers are too big to leave unwritten. Trust isn't the same as written authority, and the law knows the difference even if we don't always think about it.

A question for today: if your agent needed to make a major legal decision for you tomorrow, does your POA actually say they can, or are you just assuming it does?

At FeedingBird, we walk you through exactly which powers matter, state by state, so nothing important gets left unwritten.

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