Kesha Tanabe brings a rare perspective to bankruptcy law. As a former U.S. Bankruptcy Judge for the District of Minnesota and current attorney at Vogel Law Firm, she’s witnessed the bankruptcy system from multiple vantage points. Throughout her career, one constant remains: her passion for helping small and medium-sized businesses navigate financial distress.
In this interview, Kesha Tanabe discusses the emotional complexity of business bankruptcies, why the field needs more focus on small-to-medium enterprises, and what makes bankruptcy law uniquely suited to preserving the American entrepreneurial spirit.
Q: Small business bankruptcies often involve deeply personal and emotional situations for business owners. How do you balance legal requirements with the human element of these cases? And what should attorneys understand about representing clients in these circumstances?
Kesha Tanabe: Some of it’s art, some of it’s science. And the part of it that is art is about understanding what would be a home run or an ideal or a dream outcome, and understanding what somebody thinks would be a disaster.
I think we have to temper both. I think that’s why lawyers used to be called counselors or advocates—words like that acknowledge it requires this dual skillset of understanding you’re a bridge between what’s happening in someone’s business or someone’s life, and how to implement that under the bankruptcy code.
We’re constantly balancing what people’s objectives are and the risks we’re managing. The more you know about the substantive relief that’s available under the bankruptcy code and the procedural mechanisms for obtaining that relief, the more you can implement solutions that address people’s concerns and goals.
But it is deeply, deeply personal. For example, I’m just doing a pro bono Chapter 7 case right now for an individual person. She was widowed and she’s raising three kids on survivor’s benefits. In a situation like that, the dollar amount might seem small compared to my cases where I need a $10 million operating line of credit. But it’s every bit as important to both people.
I really wish people could let go of the “B word” of bankruptcy. It has too much stigma, and it implies a sense of failure. There’s a lot of worrying research about people waiting too long to file a bankruptcy case – even when they really need to, and they suffer needlessly. If you actually read the Bankruptcy Code, it uses the word “relief” in dozens of places. You’re entitled to this relief if you qualify for it. The Constitution ensures, Congress has drafted legislation to create it. Most states have their own constitutions that further enshrine these types of protection for real people and their businesses.
Q: Why do you think bankruptcy carries so much stigma, and in what ways is that stigma obstructive to small businesses?
Kesha Tanabe: Every time I teach a law school class, I always start by telling people to think about the cultural roots of debt and debt forgiveness. The concept of debt forgiveness actually comes from a lot of the Old Testament. There’s a concept of a jubilee every seven years. And in the bankruptcy code, you can file for bankruptcy once every seven years. And there’s this concept of renewal or forgiveness.
If you fast forward to Victorian England and suddenly we have debtors prisons. If you live in Minnesota, you have probably seen Charles Dickens’ A Christmas Carol at least once or twice – you quickly realize the play is not really about Christmas carols, it’s about how punitive the Victorian approach was to debt. It was a moral failure, and it had devastating consequences – people don’t go bankrupt, they are “ruined.” I think these Victorian ideas are still with us today. That’s why we have a stigmatizing, punitive attitude about debt.
America broke away from Victorian ideas – we want to be a society of seekers and entrepreneurs. Think of things like the Gold Rush or all the trading companies like the Hudson Bay Trading Company. We wanted to encourage people to try things, right? We want to be innovators, we want to be business owners and value creators.
It’s an inevitable feature of trying that there will be some percentage of failure. And that’s where the bankruptcy system comes in. I love the bankruptcy system because there are two sides of the same coin—loving entrepreneurship, loving capitalism, and knowing how to address failed ventures. You can’t have one without the other.
And this is why bankruptcy was included in the constitution by America’s founding fathers. You can’t have a democracy where people become essentially indentured or imprisoned because they’ve had some kind of failure. I have a deeply philosophical view about why what we do this work, why the work matters and how it fits into the bigger picture of living in a democracy and living in a capitalist economy. Otherwise, no one would ever try.
Q: As someone who has contributed significantly to bankruptcy scholarship and education, what’s one area of bankruptcy law that you think needs more attention or development?
Kesha Tanabe: I think scholarship about small to medium-sized enterprises is really important because the majority of companies in the United States are not large publicly traded companies. The majority of employers are small businesses—they’re everywhere. And I think they’re a uniquely American kind of institution. The ability to own your own business and start your own thing is something that I think is unique and exciting about living in America. If you’re great at making widgets or scented candles or websites or fried chicken sandwiches– whatever, you can have your own thing. I think that’s awesome.
Historically, bankruptcy professionals have catered best to the biggest businesses. But I think there’s a lot of reasons to care about small, medium enterprises. There’s a lot of value there, social value and economic value.
On Making Bankruptcy Accessible
Kesha Tanabe’s commitment to the values of small business bankruptcy is evident not only in her teaching and mentoring work but in her fundamental belief that bankruptcy serves as an opportunity to heal a broken situation.
“We’ll take your walking wounded and try to patch you up and send you back out there,” Tanabe explains. “It’s not a game of perfect. And we know that. We’ll just play the ball where it lies. We’ll just move forward from wherever it is when we get it and try our best to make it better than we found it.”
For business owners facing financial distress, and for attorneys seeking to serve them better, Tanabe’s message is clear: bankruptcy isn’t about failure. It’s about renewal, resilience, and preserving the entrepreneurial spirit that makes American business unique.
