Chapter 11

20 Pages Posted: 17 Apr 1998 Last revised: 29 Apr 2009

See all articles by Lucian A. Bebchuk

Lucian A. Bebchuk

Harvard Law School; European Corporate Governance Institute (ECGI); National Bureau of Economic Research (NBER)

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Abstract

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)).

JEL Classification: G33

Suggested Citation

Bebchuk, Lucian A., Chapter 11. The New Palgrave Dictionary of Economics and the Law, Vol. 3, pp. 219-224, 1998, Available at SSRN: https://ssrn.com/abstract=76648 or http://dx.doi.org/10.2139/ssrn.76648

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