Document Type

Article

Publication Date

2001

Abstract

Scholarly projects benefit from thoughtful criticism-particularly by those committed to a contrary view. For that reason, I feel fortunate that the three leading proponents of the efficiency of Delaware bankruptcy reorganization have taken the time to respond to our study.' These three critics recognize that the stakes are enormous. As Professor Rasmussen and Professor Thomas put it, the bankruptcy reorganization of large, public companies was "Delawarized" during the decade of the 1990s. If it can be shown that, during the period of Delawarization, the Delaware court provided a wasteful and inefficient reorganization process, it follows that even a very sophisticated "market" can make huge errors, and that by the time the market realizes it has made a mistake in the choice of a legal regime, that regime may already be locked in by a network effect. That, in turn, would discredit the frequently made argument that a legal regime must have been efficient or the market would not have chosen it.

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