Agency costs dominate academic thinking about corporate governance. The central challenge is to devise legal rules to align the interests of the managers (the agents) with those of the shareholders (the principals). This preoccupation is misplaced. Whether it is finding a babysitter or a dean,...

In a Chapter 11 reorganization, senior creditors are entitled to insist upon being paid in full before anyone junior to them receives anything. In practice, however, departures from such quot;absolute priorityquot; are commonplace. Explaining these deviations has been a central preoccupation of...

Agency costs dominate academic thinking about corporate governance. The central challenge is to devise legal rules to align the interests of the managers (the agents) with those of the shareholders (the principals). This preoccupation is misplaced. Whether it is finding a baby-sitter or a dean,...

Traditional approaches to corporate governance focus exclusively on shareholders and neglect the large and growing role of creditors. Today's creditors craft elaborate covenants that give them a large role in the affairs of the corporation. While they do not exercise their rights in sunny times...

This empirical study suggests that, far from ensuring assets are put to their best use, Chapter 11 encourages small-business entrepreneurs to remain too long with failed businesses before trying to start (or work for) new ones. Small entrepreneurs open and close a number of businesses over the...

Modern Chapter 11 places control decisions in the hands of the bankruptcy judge and insists on rigid adherence to absolute priority in all cases. In both respects, modern Chapter 11 departs sharply from the equity receivership. The equity receivership governed the reorganization of railroads and...

Perhaps within the next decade, the technology of quot;reanimationquot; will allow film producers to cast any actor, living or dead, in any role. In this respect, there will soon be no difference between Humphrey Bogart and Mickey Mouse. Soon a sequel to the Maltese Falcon can star Bogart as he...

This paper shows that the dynamics of Chapter 11 turn dramatically on the size of the business. The vast majority of the assets administered in Chapter 11 are concentrated in a handful of large cases, but most of the businesses in Chapter 11 are small, and the smaller the business, the smaller...

Chapter 11 of the Bankruptcy Code is organized around the absolute priority rule. This rule mandates the rank-ordering of claims. If one creditor has priority over another, this creditor must be paid in full before the one junior receives anything. Many have suggested various modifications to...

Over the last few years, reorganization practice has undergone a massive change. A new device — the restructuring support agreement — has transformed Chapter 11 negotiations. This puts reorganization law at a crossroads. Chapter 11's commitment to a nonmarket restructuring with a rigid...