Chapter 11: Conventional Wisdom and Reality

38 Pages Posted: 23 Aug 2007

See all articles by Jay Lawrence Westbrook

Jay Lawrence Westbrook

University of Texas at Austin - School of Law

Elizabeth Warren

Harvard Law School


Chapter 11 has greatly influenced bankruptcy reforms all over the world, but has been attacked as imposing great costs and delay with relatively meager rates of success as measured by confirmation of plans. Although some recent data have hinted at a less negative picture of the efficiency of Chapter 11, it is now also claimed it has become a mere liquidation device controlled for the benefit of creditors, with equity owners dismissed at the door. This paper reports data from two large multi-district studies of business bankruptcy for cases filed in 1994 and 2002. It finds a confirmation rate up to 70% among cases with a realistic change of success and an overall system that disposes of losers quite early in the process. The paper confirms that there was a sharp increase in the use of Chapter 11 for liquidation between 1994 and 2002, but reports that equity owners still retain an interest going forward in a majority of cases.

Keywords: Bankruptcy, Chapter 11, Reorganization, Corporate, Coprorate Finance, Empirical

Suggested Citation

Westbrook, Jay L. and Warren, Elizabeth, Chapter 11: Conventional Wisdom and Reality. U of Texas Law, Public Law Research Paper No. 125, 2nd Annual Conference on Empirical Legal Studies Paper, Available at SSRN:

Jay L. Westbrook (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States
(512) 232-1303 (Phone)


Elizabeth Warren

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-495-3101 (Phone)
617-496-6118 (Fax)

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