A Proposal for Chapter 10: Reorganization for 'Too Big to Fail' Companies
American Bankruptcy Journal, March 2009
Posted: 23 Mar 2009
Date Written: March 9, 2009
The Bankruptcy Code provides tools that are well-suited to addressing and resolving the financial problems faced by the "Big Three" automakers and other "too big to fail" companies ("TBTF Companies"). But Chapter 11 as it presently exists would inevitably impose great harm on vendors and other interrelated businesses resulting in a ripple effect causing cascading business failures and lay-offs. With comparatively minor changes to the Bankruptcy Code, enacted in the form of a streamlined new Chapter 10, however, TBTF Companies could use the powerful tools of the bankruptcy process to remedy their core financial problems without imposing on society unnecessary and harmful cascading business failures.
Keywords: Bankruptcy, Chapter 11, Chapter 10, TBTF, Too Big To Fail, Automobile Manufacturers
JEL Classification: G33, G34, G35
Suggested Citation: Suggested Citation