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Baird and Rasmussen argue that improvements in the market for firms have made sale as a going concern an effective substitute for reorganization. This reply explains why reorganizations would continue even if firms could be sold for their full going concern values.
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The Nature Of The Bankrupt Firm: A Response To Baird And Rasmussen's "The End Of Bankruptcy", Lynn M. Lopucki
The Nature Of The Bankrupt Firm: A Response To Baird And Rasmussen's "The End Of Bankruptcy", Lynn M. Lopucki
UF Law Faculty Publications
In an article recently published in the Stanford Law Review Professors Douglas G. Baird and Robert K. Rasmussen assert that big-case bankruptcy reorganizations have "all but disappeared" and give three theoretical explanations. This reply provides empirical evidence that the assertion is wrong; reorganizations not only survive but are booming. It then explains how their theoretical explanations led Baird and Rasmussen to the wrong conclusion. In their first explanation, Baird and Rasmussen note that modern firms have few firm-specific or dedicated assets. From that observation, they argue that the firms have no going concern value. This reply argues that the going …