Should We Abolish Chapter 11? Evidence from Canada
AbstractChapter 11 has been severely criticized over the last decade. Some American jurists arguing in favor of revising Chapter 11 have raised the possibility that the Canadian reorganization system might be a good alternative. This article examines data on firms undergoing reorganization under the Canadian bankruptcy system and argues that there are fruitful lessons to be learned from the Canadian experience with court-supervised reorganization. Canadian reorganization plans have very high rates of acceptance, confirmation, and consummation. Firms in Canada are almost eight times more likely to survive reorganization than are firms in Chapter 11. Further, small firms are just as likely as large firms are to emerge from reorganization in Canada, contrary to experience in the United States. The data also show that Canadian reorganization procedure offers a very rapid solution to financial distress and that creditors gain, in expected value terms, from reorganization over liquidation. We use our analysis of the relative performance of the two systems to suggest some avenues for reform of Chapter 11. Copyright 1999 by the University of Chicago.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Legal Studies.
Volume (Year): 28 (1999)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.journals.uchicago.edu/JLS/
Other versions of this item:
- Timothy C. G. Fisher & Jocelyn Martel, 1996. "Should We Abolish Chapter 11 : Evidence from Canada," CIRANO Working Papers 96s-22, CIRANO.
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- White, Michelle J, 1989. "The Corporate Bankruptcy Decision," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 129-51, Spring.
- Jocelyn Martel, 1994. "More on the Impact of Bankruptcy Reform in Canada," CIRANO Working Papers 94s-17, CIRANO.
- Jocelyn Martel, 1996. "Solutions au stress financier : Un survol de la littérature," CIRANO Working Papers 96s-03, CIRANO.
- Jocelyn Martel, 1995. "Signaling in Financial Reorganization: Theory and Evidence from Canada," CIRANO Working Papers 95s-34, CIRANO.
- Philippe Aghion & Oliver D. Hart & John Moore, 1994.
"The Economics of Bankruptcy Reform,"
in: The Transition in Eastern Europe, Volume 2: Restructuring, pages 215-244
National Bureau of Economic Research, Inc.
- Aghion, P. & Hart, O. & Moore, J., 1992. "The Economics of Bankruptcy Reform," Working papers 92-11, Massachusetts Institute of Technology (MIT), Department of Economics.
- Philippe Aghion & Oliver Hart & John Moore, 1992. "The Economics of Bankruptcy Reform," CEP Discussion Papers dp0093, Centre for Economic Performance, LSE.
- Philippe Aghion & Oliver Hart & John Moore, 1992. "The Economics of Bankruptcy Reform," NBER Working Papers 4097, National Bureau of Economic Research, Inc.
- White, Michelle J, 1983. " Bankruptcy Costs and the New Bankruptcy Code," Journal of Finance, American Finance Association, vol. 38(2), pages 477-88, May.
- Warner, Jerold B, 1977. "Bankruptcy Costs: Some Evidence," Journal of Finance, American Finance Association, vol. 32(2), pages 337-47, May.
- Weiss, Lawrence A., 1990. "Bankruptcy resolution: Direct costs and violation of priority of claims," Journal of Financial Economics, Elsevier, vol. 27(2), pages 285-314, October.
- Eisenberg, Theodore & Tagashira, Shoichi, 1994. "Should We Abolish Chapter 11? The Evidence from Japan," The Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 111-57, January.
- Daigle, Katherine H & Maloney, Michael T, 1994. "Residual Claims in Bankruptcy: An Agency Theory Explanation," Journal of Law and Economics, University of Chicago Press, vol. 37(1), pages 157-92, April.
- White, Michelle J, 1994. "Corporate Bankruptcy as a Filtering Device: Chapter 11 Reorganizations and Out-of-Court Debt Restructurings," Journal of Law, Economics and Organization, Oxford University Press, vol. 10(2), pages 268-95, October.
- Franks, Julian R. & Torous, Walter N., 1994. "A comparison of financial recontracting in distressed exchanges and chapter 11 reorganizations," Journal of Financial Economics, Elsevier, vol. 35(3), pages 349-370, June.
- Timothy C. G. Fisher & Jocelyn Martel, 1994. "Will the Bankruptcy Reform Work? An Empirical Analysis of Financial Reorganization in Canada," Canadian Public Policy, University of Toronto Press, vol. 20(3), pages 265-277, September.
- Eberhart, Allan C & Moore, William T & Roenfeldt, Rodney L, 1990. " Security Pricing and Deviations from the Absolute Priority Rule in Bankruptcy Proceedings," Journal of Finance, American Finance Association, vol. 45(5), pages 1457-69, December.
- Jocelyn Martel, 1994. "Commercial Bankruptcy and Financial Reorganization in Canada," CIRANO Papers 94c-02, CIRANO.
- Ngo Van Long & Antoine Soubeyran, 1996.
"R&D Spillovers and Location Choice under Cournot Rivalry,"
CIRANO Working Papers
- Van Long, N. & Soubeyran, A., 1996. "R&D Spillovers and Location Choice Under Cournot Rivalry," G.R.E.Q.A.M. 96a35, Universite Aix-Marseille III.
- Lars-Hendrick Röller & Bernard Sinclair-Desgagné, 1996. "Asymmetry in Cournot Duopoly," CIRANO Working Papers 96s-23, CIRANO.
- Fabrice Barthélémy & Timothy C.G. Fisher & Jocelyn Martel, 2006.
"What Discount Rate Should Bankruptcy Judges Use? Estimates from Canadian Reorganization Data,"
THEMA Working Papers
2006-19, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Barthlmy, Fabrice & Fisher, Timothy C.G. & Martel, Jocelyn, 2009. "What discount rate should bankruptcy judges use? Estimates from Canadian reorganization data," International Review of Law and Economics, Elsevier, vol. 29(1), pages 67-72, March.
- Fabrice Barthelemy & Timothy Fisher & Jocelyn Martel, 2009. "What Discount Rate Should Bankruptcy Judges Use? Estimate from Canadian Reorganization Data," Post-Print hal-00707413, HAL.
- Bart Leyman, 2012. "The uneasy case for rehabilitating small firms under the 1997-reorganization law in Belgium: evidence from reorganization plans," European Journal of Law and Economics, Springer, vol. 34(3), pages 533-560, December.
- Leyman, Bart & Schoors, Koen J.L. & Coussement, Peter, 2011. "Does court-supervised reorganization work? Evidence from post-confirmation firm failure," International Review of Law and Economics, Elsevier, vol. 31(3), pages 149-168, September.
- Alexander Radygin & Revold Entov & Irina Mezheraups & Alina Gontmakher & Yuri Simachev & Natalia Shmeleva & Mikhail Kuzyk & Harry Swain, 2005. "The Institution of Bankruptcy: Development, Problems, Areas of Reforming," Published Papers 123, Gaidar Institute for Economic Policy, revised 2012.
- B. Leyman & K. Schoors & P. Coussement, 2008. "The Role of Firm Viability, Creditor Behavior and Judicial Discretion in the Failure of Distressed Firms under Courtsupervised Restructuring: Evidence from Belgium," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 08/509, Ghent University, Faculty of Economics and Business Administration.
- Clas BergstrÃ¶m & Theodore Eisenberg & Stefan Sundgren, 2004. "On the Design of Efficient Priority Rules for Secured Creditors: Empirical Evidence from A Change in Law," European Journal of Law and Economics, Springer, vol. 18(3), pages 273-297, December.
- Lars Vilhuber, 1996. "Wage Flexibility and Contract Structure in Germany," CIRANO Working Papers 96s-28, CIRANO.
- Ondøej Knot & Ondøej Vychodil, 2006. "Czech Bankruptcy Procedures: Ex-post Efficiency View," Working Papers IES 2006/03, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jan 2006.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).
If references are entirely missing, you can add them using this form.