In the 1936 case of Steelman, Trustee in Bankruptcy v. All Continent Corp., the United States Supreme Court dealt with a dispute over bankruptcy proceedings and corporate obligations. The All Continent Corporation had previously issued bonds that were secured by a deed of trust on its property. When it filed for bankruptcy, Steelman was appointed as trustee to manage the corporation's assets and liabilities during this process. However, there was disagreement about whether or not these bonds should be considered 'secured' or 'unsecured' debts under federal bankruptcy law - an important distinction that would affect how much money bondholders could recover from the bankrupt company's estate. The Supreme Court ruled in favor of Steelman, holding that these bonds were indeed unsecured debts because they did not meet certain requirements outlined in Section 77B(f) of the Bankruptcy Act (a provision specifically dealing with reorganization plans). This decision meant that holders of these particular types of corporate bonds stood lower down in priority when it came to receiving payments from a bankrupt debtor’s remaining assets.

In the dissenting opinion for Steelman, Trustee in Bankruptcy v. All Continent Corp., Justice Cardozo disagreed with the majority's interpretation of Section 77B of the Bankruptcy Act. He argued that it was not Congress' intent to allow a debtor corporation to propose a plan of reorganization without first obtaining approval from its creditors and stockholders. According to him, this would give too much power to bankrupt corporations at the expense of their creditors and shareholders who are left vulnerable by such an arrangement. Furthermore, he contended that allowing debtors such freedom could lead to abuses as they might use bankruptcy proceedings as a means of escaping their obligations rather than genuinely seeking financial rehabilitation through fair negotiations with all parties involved.