Law Commons^™

Serial Entrepreneurs And Small Business Bankruptcies, Douglas G. Baird, Edward R. Morrison

Faculty Scholarship

Chapter 11 is thought to preserve the going-concern surplus of a financially distressed business – the extra value that its assets possess in their current configuration. Financial distress leads to conflicts among creditors that can lead to inefficient liquidation of a business with going-concern surplus. Chapter 11 avoids this by providing the business with a way of fashioning a new capital structure. This account of Chapter 11 fails to capture what is happening in the typical case. The typical Chapter 11 debtor is a small corporation whose assets are not specialized and rarely worth enough to pay tax claims. There …

Adversary Proceedings In Bankruptcy: A Sideshow, Douglas G. Baird, Edward R. Morrison

Faculty Scholarship

Across a broad range of cases, the civil trial is disappearing. In the early 1960s, about twelve percent of federal civil cases were resolved by trial; by 2002 that percentage had fallen to less than two percent. This sharp decline raises important questions about the quality y and costs of decisionmaking in federal district courts. After all, these courts exist to resolve cases and controversies. It matters whether (and why) these disputes are resolved in or outside the courtroom.

Marc Galanter and Elizabeth Warren suggest that the same thing is happening in the bankruptcy courts and that there is likewise …