The Direct Costs of Corporate Reorganization: An Empirical Examination of Professional Fees in Large Chapter 11 Cases
American Bankruptcy Law Journal, Vol. 74, pp. 509-522, Fall 2000
44 Pages Posted: 30 Jan 2006 Last revised: 27 Oct 2008
In this paper I look at a sample of firms that filed for chapter 11 protection in 1994. Unlike most other studies of the direct costs of chapter 11, this sample includes both public and private firms. The direct costs of chapter 11 - defined as professional fees and expenses for purposes of this paper - are found to represent 2.5% of pre-bankruptcy assets, when prepackaged cases are excluded from the sample. The paper then finds that this figure is comparable to the costs of other significant corporate transactions.
Keywords: chapter 11, direct costs, financial distress
Suggested Citation: Suggested Citation