Get in Line: Chapter 11 Restructuring in Crowded Bankruptcy Courts
Benjamin Charles Iverson
Northwestern University - Kellogg School of Management
March 20, 2014
This paper tests whether Chapter 11 restructuring outcomes are affected by time constraints in busy bankruptcy courts. Using the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act as an exogenous shock to caseloads, I find that as bankruptcy judges become busier they allow more firms to reorganize and liquidate fewer firms. Firms that reorganize in busy courts spend longer in bankruptcy, while firms that are dismissed from busy courts are more likely to re-file for bankruptcy within three years of their original filing. In addition, commercial banks report higher charge-offs on business lending when bankruptcy caseload increases.
Number of Pages in PDF File: 63
Keywords: Financial distress, bankruptcy, Chapter 11
JEL Classification: G30, G33, G34, K22
Date posted: October 3, 2012 ; Last revised: April 2, 2014
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