A Proposal for Chapter 10: Reorganization for 'Too Big to Fail' Companies

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, reorganization, too big to fail, automobile companies

JEL Classification: K12, K29

Suggested Citation: Suggested Citation

Kuney, George W. and St. James, Michael, A Proposal for Chapter 10: Reorganization for 'Too Big to Fail' Companies (November 11, 2009). University of Tennessee Legal Studies Research Paper No. 88, Available at SSRN: https://ssrn.com/abstract=1503991 or http://dx.doi.org/10.2139/ssrn.1503991