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NYU Pollack Center for Law & Business Working Papers >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26005
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| Title: | Destruction of Value in the New Era of Chapter 11 |
| Authors: | Adler, Barry E
Capkun, Vedran
Weiss, Lawrence A |
| Keywords: | Bankruptcy
Incentives
Bankruptcy Initiation
Economic distress
Financial distress |
| Issue Date: | 24-Oct-2006 |
| Series/Report no.: | CLB-06-032 |
| Abstract: | The Bankruptcy Reform Act of 1978 placed corporate managers in control
of corporate debtors in bankruptcy and of the bankruptcy process.
Although the act remains law, between 2000 and 2001 it became common for
creditors to control financially distressed firms and the bankruptcy
process. This study tests whether the change from manager to creditor
control created or exacerbated managerial incentive to delay filing for
bankruptcy or gave secured creditors an opportunity to delay such
filing. We observe a significant and prolonged deterioration in the
financial condition of firms that filed for bankruptcy after 2001 as
compared to firms that filed before 2000. We also observe patterns of
operating losses and liquidations that suggest adverse economic
consequences from such delay. |
| URI: | http://hdl.handle.net/2451/26005 |
| Appears in Collections: | NYU Pollack Center for Law & Business Working Papers
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