Journal Article

BANKRUPTCY'S NEW AND OLD FRONTIERS

Bratton, William W., Skeel, David A.

2018

Overview

Today's typical Chapter 11 case looks radically different than did the typical case in the 1978 Bankruptcy Code's early years. In those days, Chapter 11 afforded debtors a cozy haven. Most everything that mattered occurred within the context of the formal proceeding, where the debtor enjoyed agenda control, a leisurely timetable, and judicial solicitude. The safe haven steadily disappeared over time, displaced by a range of countervailing forces and a cooperative bankruptcy bench. Lenders, especially debtor-in-possession financers, gradually began to shape the trajectory of many proceedings. They today determine the course of most of the cases. More recently, additional players such as hedge funds and equity funds have also entered the scene, altering the bargaining dynamic. New financial instruments complicate debtors' capital structures and creditor incentives. Even the sites and modes of decisionmaking have shifted, as today's key decisions are negotiated and embedded in contracts concluded even before the debtor files for bankruptcy. The changes, which continue to accumulate, are fundamental. Here, Bratton and Skeel discuss the New Deal redirection and recent evolution of corporate reorganization.

• Publisher: students of the University of Pennsylvania Law School,University of Pennsylvania, Law School,University of Pennsylvania Law School
• Subject: Bankruptcy law / Bankruptcy reorganization / Corporate reorganization / Corporate reorganizations / History / Laws, regulations and rules