Chapter 11 'Failure'
18 Pages Posted: 9 Apr 2009 Last revised: 8 May 2009
Date Written: April 8, 2009
Nearly thirty years of chapter 11 scholarship offers little insight into the reasons why certain firms are unable to confirm a reorganization plan. This paper offers the first empirical model of why firms fail in chapter 11. Using a database of 945 chapter 11 cases filed in 2004, and a simple definition of chapter 11 failure as any case that is converted to chapter 7 or dismissed, I show that some of the most significant predictors of "failure" are observable on the first day of a chapter 11 case.
Keywords: Chapter 11, bankruptcy, reorganization, financial distress, Lubben
JEL Classification: M10
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