Accidental Convergence: Corporate Reorganization in Two Federal Systems
25 Pages Posted: 25 Jul 2009 Last revised: 7 Oct 2009
Date Written: July 25, 2009
The 2005 changes to the U.S. Bankruptcy Code represent the first significant step away from a long-term inclination toward corporate rescue. In doing so, Congress, however unwittingly, partially reunited American corporate bankruptcy practice with its long forgotten, much smaller twin, Switzerland. Why would Congress want to move the American system in this direction? To address this key question, I offer a comparison of corporate reorganization systems in these two leading commercial, federal systems. In particular, I examine the Swiss system for rescuing failed companies and compare it with the post-BACPA version of chapter 11. While the American system clearly remains more “debtor friendly,” the space between the two systems has significantly narrowed. More generally, through this short paper I demonstrate how Congress’ ill-conceived amendments to chapter 11 may have damaged a corporate reorganization system that is increasingly the subject of imitation worldwide.
Keywords: Chapter 11, corporate reorganization, bankruptcy, Switzerland, BACPA, financial distress
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