The Changing Nature of Chapter 11

42 Pages Posted: 29 May 2014

See all articles by Sreedhar T. Bharath

Sreedhar T. Bharath

Arizona State University (ASU) - Finance Department

Venkatesh Panchapagesan

Indian Institute of Management (IIMB), Bangalore

Ingrid M. Werner

The Ohio State University - Fisher College of Business

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Date Written: May 29, 2014

Abstract

The U.S. Chapter 11 bankruptcy has traditionally been viewed as equity friendly, with frequent absolute priority deviations (APDs) in favor of equity. By contrast, based on a more recent sample we find that both APDs and time spent in bankruptcy have declined dramatically. We hypothesize and confirm that innovations in the bankruptcy process, such as reliance on debtor-in-possession (DIP) financing and adoptions of key employee retention plans (KERPs) help explain this decline. We conclude that while the letter of bankruptcy law has not changed, Chapter 11 outcomes have become more creditor friendly in recent years.

Keywords: Bankruptcy, APR violations, Chapter 11

Suggested Citation

Bharath, Sreedhar T. and Panchapagesan, Venkatesh and Werner, Ingrid M., The Changing Nature of Chapter 11 (May 29, 2014). IIM Bangalore Research Paper No. 461. Available at SSRN: https://ssrn.com/abstract=2443248 or http://dx.doi.org/10.2139/ssrn.2443248

Sreedhar T. Bharath (Contact Author)

Arizona State University (ASU) - Finance Department ( email )

W. P. Carey School of Business
PO Box 873906
Tempe, AZ 85287-3906
United States

Venkatesh Panchapagesan

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

Ingrid M. Werner

The Ohio State University - Fisher College of Business ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-292-6460 (Phone)
614-292-2418 (Fax)

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