Abstract

http://ssrn.com/abstract=781487
 
 

Footnotes (271)



 


 



Is Forum-Shopping Corrupting America's Bankruptcy Courts? Review of Lynn M. LoPucki, 'Courting Failure: How Competition for Big Cases is Corrupting the Bankruptcy Courts'


Todd J. Zywicki


George Mason University School of Law; PERC - Property and Environment Research Center


George Mason Law & Economics Research Paper No. 05-16
Georgetown Law Journal, Vol. 94, No. 4, pp. 1141-1195, April 2006

Abstract:     
In his new book, "Courting Failure: How Competition for Big Cases is Corrupting the Bankruptcy Courts", Professor Lynn LoPucki's book argues that that current bankruptcy venue rules have spawned an improper competition for big cases that has corrupted America's bankruptcy courts. LoPucki argues that this competition has harmed the bankruptcy system and the economy, transferring wealth from creditors and employees to incumbent management and bankruptcy professionals. He also argues that the competition that has corrupted the American bankruptcy system is being replicated internationally, resulting in a similar competition and similar harm on the global stage.

This essay reviews LoPucki's book and its central theoretical and empirical arguments. LoPucki offers powerful empirical evidence that something is amiss with much of current American bankruptcy practice. This essay will try to flesh out in more detail the model and theoretical foundations that implicitly underlie LoPucki's indictment of bankruptcy forum-shopping (and other forms of forum-shopping as well). Empirical evidence standing alone is insufficient to draw conclusions about whether forum-shopping is in general good or bad without a clearly stated hypothesis to test. Instead, it is necessary to also have a theoretical model sufficient to generate testable hypotheses as a predicate both for determining whether forum-shopping is good or bad on net, as well as the likely effects of reform proposals. Although LoPucki identifies several problem areas in the current Chapter 11 reorganization process, it is not as clear that all of these problems can be clearly attributed to runaway forum-shopping. Instead, they may simply be good-faith errors or mistakes, for which continued competition may be beneficial, in that the competition may actually expedite the process of self-correction.

This review essay develops a model of the institutions and incentives governing the forum-shopping competition described by LoPucki in an effort to determine whether the empirical observations proffered by LoPucki can be best explained as the outcome of improper forum-shopping competition. The essay then closes with an analysis of provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, noting that many of the provisions in the legislation offer substantive responses to many of the problems identified by LoPucki.

Number of Pages in PDF File: 56

Keywords: Bankruptcy, Corporate Reorganization, Chapter 11, Forum-Shopping

JEL Classification: B53, K00

Accepted Paper Series


Download This Paper

Date posted: August 11, 2005  

Suggested Citation

Zywicki, Todd J., Is Forum-Shopping Corrupting America's Bankruptcy Courts? Review of Lynn M. LoPucki, 'Courting Failure: How Competition for Big Cases is Corrupting the Bankruptcy Courts'. George Mason Law & Economics Research Paper No. 05-16; Georgetown Law Journal, Vol. 94, No. 4, pp. 1141-1195, April 2006. Available at SSRN: http://ssrn.com/abstract=781487

Contact Information

Todd J. Zywicki (Contact Author)
George Mason University School of Law ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8091 (Phone)
703-993-8088 (Fax)

George Mason Law School Logo

PERC - Property and Environment Research Center
2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

Feedback to SSRN


Paper statistics
Abstract Views: 4,048
Downloads: 321
Download Rank: 50,282
Footnotes:  271

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.484 seconds