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Value Destruction in the New Era of Chapter 11

Abstract : Over the past two decades, control over the US bankruptcy reorganization process has shifted from a debtor's pre-bankruptcy managers to holders of secured claims. The result has been increased adherence to absolute priority and a harder landing for the debtor's managers and shareholders. Because managers still make or can influence the decision whether or when to file a bankruptcy petition, we hypothesize that anticipation of bankruptcy under these new conditions will result in a delay in filing, increased leverage, increased secured debt, and a reduction of asset value for firms at the time they file. We present empirical evidence consistent with our hypotheses.
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https://hal-hec.archives-ouvertes.fr/hal-00674234
Contributor : Antoine Haldemann <>
Submitted on : Sunday, February 26, 2012 - 7:10:39 PM
Last modification on : Thursday, January 11, 2018 - 6:19:31 AM

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Vedran Capkun, Barry E. Adler, Lawrence A. Weiss. Value Destruction in the New Era of Chapter 11. Journal of Law, Economics, and Organization, Oxford University Press (OUP), 2013, 29 (2), pp.461-483. ⟨10.1093/jleo/ewr004⟩. ⟨hal-00674234⟩

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