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A Positive Theory of Chapter 11

Kevin A. Kordana
University of Virginia - School of Law

Eric A. Posner
University of Chicago - Law School

October 1998

University of Chicago Law School, John M. Olin Law & Economics Working Paper No. 61

Abstract:
This paper analyzes the voting rules of Chapter 11 using models from noncooperative game theory. Prior work has relied mainly on a model of bargaining between the debtor and a single creditor with perfect information. We expand on this work by considering two-party bargaining with imperfect information, and bargaining (with perfect and imperfect information) among a single debtor and multiple creditors. In addition, prior work has focused on explaining the role of the exclusivity period, the absolute priority rule, and the liquidation floor in Chapter 11 bargaining. We also consider the role of majoritarianism and supermajoritarianism, bicameralism, and classification, and the desirability of allowing creditors to purchase claims from each other.

JEL Classifications: G33

Working Paper Series

Date posted: November 17, 1998 ; Last revised: August 25, 2009

Suggested Citation

Kordana, Kevin A. and Posner, Eric A., A Positive Theory of Chapter 11 (October 1998). University of Chicago Law School, John M. Olin Law & Economics Working Paper No. 61. Available at SSRN: http://ssrn.com/abstract=137897 or doi:10.2139/ssrn.137897

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Contact Information

Kevin A. Kordana (Contact Author) University of Virginia - School of Law ( email ) 580 Massie Road Charlottesville, VA 22903 United States 804-924-3680 (Phone) 804-924-7536 (Fax)
Eric A. Posner University of Chicago - Law School ( email ) 1111 E. 60th St. Chicago, IL 60637 United States 773-702-0425 (Phone) 773-702-0730 (Fax) HOME PAGE: http://www.law.uchicago.edu/faculty/posner-e/