Changes in Chapter 11 Success Levels Since 1980

This Article revisits the nine measures of success that Bill Whitford and I reported on in Patterns in the Bankruptcy Reorganization of Large, Publicly Held Companies, with twenty-six additional years of experience and data on 964 additional cases. My principal objective has been to determine whether Chapter 11 has become more or less successful by those measures. I conclude that Chapter 11 has become less successful by three of the seven LoPucki-Whitford criteria for which data are available. The courts confirm plans in a significantly smaller proportion of cases, a significantly smaller proportion of companies survive, and a significantly smaller proportion of CEOs are replaced. This apparent decline in Chapter 11\u27s performance is generally consistent with the assertions of leading academics and practitioners.10 In one respect, Chapter 11 has become more successful. The surviving companies emerge at a larger proportion of their prefiling asset size. With respect to three other LoPucki-Whitford measures, Chapter 11 outcomes have not changed significantly. Companies continue to emerge with too much leverage. In each of the first five Sections of this Article, I examine one or more of the success measures that Whitford and I reported on in the Patterns article. I summarize the LoPucki-Whitford findings, identify and explain any differences between our success measures and the BRD\u27s success measures, discuss the reasons for those differences, and report on how the “success” of Chapter 11 has varied since the LoPucki-Whitford study. In Section VI, I explain my finding of no statistically significant increase in the economic or financial distress of the filing companies. In Section VII, I conclude that, by the corresponding BRD measures, Chapter 11 is, on the whole, less successful than it was at the time Whitford and I studied it. I also conclude that the measures Whitford and I employed remain coherent and arguably still the best measures of system performance available