Bankruptcy's Quiet Revolution

41 Pages Posted: 20 Apr 2016

Date Written: April 15, 2016


Over the last few years, reorganization practice has undergone a massive change. A new device — the restructuring support agreement — has transformed Chapter 11 negotiations. This puts reorganization law at a crossroads. Chapter 11’s commitment to a nonmarket restructuring with a rigid priority system requires bankruptcy judges to police bargaining in bankruptcy, but the Bankruptcy Code gives them relatively little explicit guidance about how they should adjust when a new practice alters the bargaining environment. This essay shows that long-established principles of bankruptcy should lead judges to focus not on how these agreements affect what each party receives, but rather on how they can interfere with the flow of information needed to apply Chapter 11’s substantive rules.

Suggested Citation

Baird, Douglas G., Bankruptcy's Quiet Revolution (April 15, 2016). University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 755, Available at SSRN: or

Douglas G. Baird (Contact Author)

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-9571 (Phone)
773-702-0730 (Fax)

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