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What Drives Bankruptcy Forum Shopping? Evidence from Market Data

48 Pages Posted: 16 Jun 2016 Last revised: 23 Jun 2017

Jared A. Ellias

University of California, Hastings

Date Written: June 22, 2017


Over the past thirty years, the majority of large firms that filed for bankruptcy did so in the Federal Bankruptcy Courts of the Southern District of New York and Delaware. Some believe these experienced courts attract firms because their expertise make bankruptcy more predictable. Critics dispute this explanation, arguing instead that “predictability” is a cloak for the true, self-interested motivation of the managers, lawyers and senior creditors that influence the debtor’s venue decision. In this paper, I look for evidence supporting the views of the proponents and detractors of bankruptcy forum shopping in a large sample of market data. My results suggest that the market is better at predicting the outcomes of bankruptcy cases in the two destination venues, consistent with the hypothesis that the law there is more predictable. I do not find evidence supporting the view that those courts are biased in favor of senior creditors.

Keywords: bankruptcy; Chapter 11; courts; markets; corporate finance; judges; corporate reorganization; corporate restructuring

JEL Classification: G23, G30, G33

Suggested Citation

Ellias, Jared A., What Drives Bankruptcy Forum Shopping? Evidence from Market Data (June 22, 2017). UC Hastings Research Paper No. 178. Available at SSRN:

Jared A. Ellias (Contact Author)

University of California, Hastings ( email )

200 McAllister Street
San Francisco, CA 94102
United States

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