20 Pages Posted: 24 Jul 2000 Last revised: 9 Oct 2010
Date Written: March 1998
This essay surveys the literature on Chapter 11. I start by discussing the objectives by which the performance of corporate reorganization rules is to be judged and then consider the fundamental problem of valuation that arises in corporate reorganization. I next turn to examine the performance of the prevailing bargaining-based approach to reorganization, both in terms of its effect on total reorganization value and in terms of its effect on the division of this value. Finally, I examine the two alternative approaches that have been put forward to the approach of existing rules -- that of auctioning the reorganized company's asset (put forward by Baird (1986) and Jensen (1991)) and that of using options to reorganize the company's ownership (put forward by Bebchuk (1988)).
Suggested Citation: Suggested Citation
Bebchuk, Lucian A., Chapter 11 (March 1998). NBER Working Paper No. w6473. Available at SSRN: https://ssrn.com/abstract=226218