Several recent articles contend that Chapter of the Bankruptcy Code does not provide efficient procedures for redressing the financial distress of large firms. The authors of these articles argue that the creditors of a financially distressed firm would fare better if the corporation's problems were resolved in some other way. The argument has proceeded principally on a theoretical level, since it is virtually impossible to know for certain how firms that have been in Chapter 11 would have fared under a different procedure. We recently completed an extensive empirical study of forty-three Chapter 11 cases involving large, publicly held firms. These cases constitute the universe of cases filed under the Bankruptcy Code by publicly held companies reporting at least $100 million in assets at filing in which a plan of reorganization was confirmed before March 15, 1988. In this Article we report what has happened to the corporations and businesses involved in these cases, both during reorganization and thereafter. This account of the outcome of these cases cannot establish whether the result of the cases would have been more or less favorable if a different procedure had been used. Nonetheless, any critique of Chapter 11 should begin with an understanding of what is actually occurring in the cases. We describe the outcomes of Chapter 11 cases by referring to several variables used in the literature or in conversation. We do not believe that all of these variables provide sensible criteria for a normative evaluation of the "success" of Chapter 11. However, one purpose of this Article is to provide information for others to use in their evaluations.
Lynn M. LoPucki & William C. Whitford, Patterns in the Bankruptcy Reorganization of Large Publicly Held Companies, 78 Cornell L. Rev. 597 (1993)