A Positive Theory of Chapter 11

This paper analyzes the voting rules of Chapter 11 using models from noncooperative game theory. Prior work has relied mainly on a model of bargaining between the debtor and a single creditor with perfect information. We expand on this work by considering two-party bargaining with imperfect information, and bargaining (with perfect and imperfect information) among a single debtor and multiple creditors. In addition, prior work has focused on explaining the role of the exclusivity period, the absolute priority rule, and the liquidation floor in Chapter 11 bargaining. We also consider the role of majoritarianism and supermajoritarianism, bicameralism, and classification, and the desirability of allowing creditors to purchase claims from each other.

[1]  David B. Mustard,et al.  Crime, Deterrence, and Right‐to‐Carry Concealed Handguns , 1997, The Journal of Legal Studies.

[2]  Cass R. Sunstein,et al.  Rules and Rulelessness , 1994 .

[3]  D. Baird,et al.  The Hidden Virtues of Chapter 11: An Overview of the Law and Economics of Financially Distressed Firms , 1997 .

[4]  Richard A. Posner,et al.  Values and Consequences: An Introduction to Economic Analysis of Law , 1998 .

[5]  Chicago Unbound,et al.  What Do Judges and Justices Maximize? (The Same Thin gs Everyone Else Does) , 1993 .

[6]  Kenneth W. Dam.  Some Economic Considerations in the Intellectual Property Protection of Software , 1995, The Journal of Legal Studies.

[7]  Alan O. Sykes,et al.  Justice in immigration: The welfare economics of immigration law: a theoretical survey with an analysis of U.S. policy , 1992 .

[8]  John R. Lott,et al.  How Dramatically Did Women's Suffrage Change the Size and Scope of Government? , 1998 .

[9]  William M. Landes,et al.  Sequential versus Unitary Trials: An Economic Analysis , 1993, The Journal of Legal Studies.

[10]  William M. Landes,et al.  Copyright Protection of Letters, Diaries, and Other Unpublished Works: An Economic Approach , 1992, The Journal of Legal Studies.

[11]  John R. Lott,et al.  Does a Helping Hand Put Others at Risk?: Affirmative Action, Police Departments, and Crime , 2000 .

[12]  John R. Lott,et al.  A Simple Explanation for Why Campaign Expenditures are Increasing: The Government is Getting Bigger , 1999 .

[13]  Richard A. Posner,et al.  OPTIMAL REGULATION OF AIDS , 1992 .

[14]  Kenneth W. Dam,et al.  Chicago Unbound , 2018 .

[15]  Kenneth W. Dam.  Self-Help in the Digital Jungle , 1999 .

[16]  R. Epstein,et al.  Transaction Costs and Property Rights: Or Do Good Fences Make Good Neighbors? , 1997 .

[17]  E. Glaeser,et al.  Incentives and Social Capital: Are Homeowners Better Citizens? , 1998 .

[18]  Alan O. Sykes,et al.  The Welfare Economics of Immigration Law , 1995 .

[19]  Randal C. Picker,et al.  Bankruptcy Rules, Managerial Entrenchment, and Firm-Specific Human Capital , 1993 .

[20]  Daniel N. Shaviro.  Budget Deficits and the Intergenerational Distribution of Lifetime Consumption , 1995 .

[21]  Randal C. Picker.  Security Interests, Misbehavior, and Common Pools , 1992 .

[22]  Richard Craswell,et al.  Freedom of Contract , 1995 .

[23]  Cass R. Sunstein,et al.  Assessing Punitive Damages (with Notes on Cognition and Valuation in Law) , 1998 .

[24]  Richard A. Posner,et al.  What Do Judges and Justices Maximize? (The Same Thing Everybody Else Does) , 1993, Supreme Court Economic Review.

[25]  William M. Landes,et al.  The Art of Law and Economics: An Autobiographical Essay , 1997 .

[26]  John R. Lott,et al.  Term limits and electoral competitiveness: Evidence from California’s state legislative races , 1997 .

[27]  Geoffrey P. Miller,et al.  Explaining Deviations from the Fifty-Percent Rule: A Multimodal Approach to the Selection of Cases for Litigation , 1996, The Journal of Legal Studies.

[28]  Christine Jolls,et al.  A Behavioral Approach to Law and Economics , 1998 .

[29]  Richard A. Posner,et al.  The Economics of Legal Disputes Over the Ownership of Works of Art and Other Collectibles , 1996 .

[30]  John R. Lott,et al.  Punitive Damages: Their Determinants, Effects on Firm Value, and the Impact of Supreme Court and Congressional Attempts to Limit Awards , 1998 .

[31]  Richard A. Epstein.  Contracts Small and Contract Large: Contract Law through the Lens of Laissez-Faire , 2020, The Fall and Rise of Freedom of Contract.

[32]  Randal C. Picker.  Simple Games in a Complex World: A Generative Approach to the Adoption of Norms , 1997 .

[33]  J. Mark Ramseyer,et al.  Judicial Independence in Civil Law Regimes: Econometrics from Japan , 1996 .

[34]  Richard A. Epstein,et al.  The Ubiquity of the Benefit Principle , 1994 .

[35]  D. Baird,et al.  The Law and Economics of Contract Damages , 1995 .

[36]  J. Mark Ramseyer,et al.  The Market for Children: Evidence from Early Modern Japan , 1995 .

[37]  J. Mark Ramseyer,et al.  Credibly Committing to Efficiency Wages: Cotton Spinning Cartels in Imperial Japan , 1993 .

[38]  D. Baird,et al.  Revisiting Auctions in Chapter 11 , 1993, The Journal of Law and Economics.

[39]  A. Sykes.  An Introduction to Regression Analysis , 1993 .

[40]  J. Mark Ramseyer,et al.  Explicit Reasons for Implicit Contracts: The Legal Logic to the Japanese Main Bank System , 1993 .