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Time-resolved X-ray photoelectron spectroscopy (TR-XPS) is used in a simulation study to monitor the excited state intramolecular proton transfer between oxygen and nitrogen atoms in 2-(iminomethyl)phenol. Real-time monitoring of the chemical bond breaking and forming processes is obtained through the time evolution of excitedstate chemical shifts. By employing individual atomic probes of the proton donor and acceptor atoms, we predict distinct signals with opposite chemical shifts of the donor and acceptor groups during proton transfer. Details of the ultrafast bond breaking and forming dynamics are revealed by extending the classical electron spectroscopy chemical analysis to real time. Through a comparison with simulated time-resolved photoelectron spectroscopy at the valence level, the distinct advantage of TR-XPS is demonstrated thanks to its atom specificity. [ABSTRACT FROM AUTHOR]

Copyright of Revista Jurídica (0103-3506) is the property of Revista Juridica and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

To maintain future supplier competition, manufacturers may support financially distressed suppliers by sourcing from them, even if they are less efficient than competitors, and by procuring larger quantities from them at higher prices. We analyze these strategies in a model in which a manufacturer decides for one of two available suppliers, supplier bankruptcy risk is endogenous, and financial distress can lead to internal or external reorganization. Following bankruptcy, the remaining supplier may serve as a backup option. Our research identifies settings in which the manufacturer should support the distressed supplier. We also find that in some cases, a nondistressed supplier may charge price premiums due to its competitor's distress, while in other cases, it may use predatory pricing to drive its competitor into bankruptcy. We complement our results with a small case study and show how our model can explain patterns observed in industry. [ABSTRACT FROM AUTHOR]

The article highlights the inaugural survey by the American Bar Association (ABA) Business Law Section on Chapter 15 of the U.S. Bankruptcy Code relating to cross-border restructurings. Topics include an informal judicial commentary regarding cross-border restructuring regimes and general rule of law principles, the key statutory provisions implicated under Chapter 15, a summary of the key cases that arose under the law, and an overview of specific components and procedures of Chapter 15.

Corporate governance in reorganization is an important guarantee for the success of troubled firms' rescue. Using a dataset of 93 listed companies in reorganization in China over the last 16 years and through a binary division of decision making in reorganization, the paper presents the first empirical study of governance in the manager management model and the debtor’s own management model during reorganization, found that the manager governance was plagued by the manager’s insufficient ability of business decision-making, which was difficult to improve the operating value of the enterprise; Under the self-management of the debtors, they were vulnerable to the manipulation of the controlling shareholder, and the allocation of losses from reorganization decision was unfair. This paper proposed to change the current model of the manager or debtor fully implementing the reorganization decision and business decision during the bankruptcy reorganization, and construct the dual model of mixed corporate governance for the manager to execute the reorganization decision and the debtor to implement the operation decision separately. The study provides a novel model for corporate governance in bankruptcy reorganization.

This study constructs an evolutionary game model of government, creditors, investors, and enterprises participating in bankruptcy reorganization, analyzes the strategy selection mechanism of the four parties under the government incentive mechanism, systematically analyzes the strategy selection process of each participant, discusses the effectiveness of government incentives in promoting the bankruptcy reorganization process, and finds out the stable point in the replication dynamic system. Finally, MATLAB 2018 software is used to numerically model the influence of key elements of the system. The research shows that under the government's incentive mechanism, creditors participate in bankruptcy reorganization in the form of debt-to-equity swaps, investors participate in bankruptcy reorganization in the form of providing high-quality assets, and enterprises participate in bankruptcy reorganization in the form of reform and transformation which is a stable strategy to replicate the dynamic system; the strategy of the enterprises will affect the strategy choice of creditors and investors; the completion of bankruptcy reorganization is inseparable from the government's incentives, and the government's strategy will directly affect the strategic choice of enterprises; and the government's support and constraint strength satisfy the following quantitative relationship: when M1>S3–C1 and L1>B1–C1, it can better promote the bankruptcy and reorganization process. [ABSTRACT FROM AUTHOR]

We study how innovative firms manage their innovation portfolios after filing for Chapter 11 reorganization using three decades of data. We find that they sell off core (i.e., technologically critical and valuable), rather than peripheral, patents in bankruptcy. The selling pattern is driven almost entirely by firms with greater use of secured debt, and the mechanism is secured creditors exercising their control rights on collateralized patents. Creditor-driven patent sales in bankruptcy have implications for technology diffusion—the sold patents diffuse more slowly under new ownership and are more likely to be purchased by patent trolls. This paper was accepted by Gustavo Manso, finance. [ABSTRACT FROM AUTHOR]

The Dniester River is the most important source of quality water in the Republic of Moldova. In the current difficult social-economic conditions, as well as the accelerated climate changes, the provision of quality water represents a primary imperative of public policies and a important direction of interdisciplinary studies. In this study were applied statistical, analytical, cartographic and comparative methods. In the analyzed period (2003-2020), the total volume of water used in the Dniester Hydrographical District was, on average, 759 million m3, including 670 million m3 (88%) in the Transdnestrian Region. For technological purposes was used, on average, 580 million m3 or over ? (76%) of the total volume of water used, for household purposes - 111 million m3 (15%) and for agricultural purposes - only 66.1 million m3 (8.7%), including for irrigation - 41.1 million m3 (5.4%). In the 2003-2020 years, the total volume of water used registers an oscillating dynamic. The maximum of water consumption in the 2007 and 2020 years are due to the manifestation of stronger droughts in these years. In the 2008-2016 years, there is a negative trend, which is due to the bankruptcy and reorganization of large agricultural companies and of Zonal Stations for Irrigation. [ABSTRACT FROM AUTHOR]

Bankruptcy offers a fresh start that frees individuals from crushing debt burdens. Many insolvent Americans are, however, simply too poor to afford bankruptcy. Filing for even the simplest type of bankruptcy costs around $1,800, with most of this money paid to attorneys who help complete more than twenty required forms and schedules. These forms verify that the debtor qualifies for relief and help divide the debtor's estate among creditors, but for the large majority of debtors, this paperwork is unnecessary because the debtor easily qualifies for relief and has no assets to distribute. History offers a better model. Two centuries ago, the law granted release from debtor's prison through the simple execution of a "poor debtor's oath"--a short declaration that the debtor lacked substantial assets. For most debtors, modern bankruptcy law should require no more than an updated version of a poor debtor's oath that provides relief unless creditors or their trustees are willing to pay some cost to challenge the oath's validity. To discourage the wealthy from taking false oaths, Congress could sharply limit the exemptions available in the simplified procedure. Even dramatically smaller exemptions would protect all of the assets of the overwhelming majority of bankrupt debtors. By avoiding costly processes for debtors who obviously qualify for bankruptcy relief, a modern poor debtor's oath could save hundreds of millions of dollars in transaction costs each year and greatly expand access to bankruptcy. [ABSTRACT FROM AUTHOR]

This paper analyzes the impact of SMEs' entrepreneurial and learning orientation on the outcome of reorganization. We draw on a resource-based view on reorganization, linked with entrepreneurial and learning orientation. Previous research indicates a higher success rate of out-of-court reorganization compared to formal court-supervised proceedings. Out-of-court solutions are handled privately, therefore little is publicly known about the process of an out-of-court reorganization and what determines its success or failure. Thus, we focus on out-of-court reorganization, analyzing a sample of 521 Austrian SMEs. The data were collected from the financing banks. To test our hypothesized model of the impact of entrepreneurial and learning orientation on reorganization success, we applied bivariate analyses and logistic regression. The findings indicate that both entrepreneurial orientation and learning orientation positively influence the success of reorganization. While action-oriented entrepreneurial orientation probably has a stronger impact on short-term success, vision-oriented learning orientation seems to be more important for long-term turnaround. Company size acts as a moderator, indicating that small companies are less likely to succeed than microand medium-sized companies. The study has implications for corporate practice and future research. [ABSTRACT FROM AUTHOR]

This Article presents a new theory for analyzing bankruptcy-reorganization proceedings as well as a reorganization mechanism for public companies that may best meet legislative objectives: maximizing firm value and dividing it according to the claimants' legal priorities. Called Gordian knot theory, it suggests that there is a strong structural and material connection between reorganization stages, whereby bargaining and litigation between the claimants over the reorganization pie lead to progressive destruction of the firm's value and infringement on their legal rights. To demonstrate this theory, this Article focuses on reorganization's allocation and reallocation stages--where the claimants' original and new rights are determined, respectively-- and how the connection between them prevents the legislative objectives from being met. Alternative approaches suggested for attaining these objectives, including Roe's, Bebchuk's, Baird's, Aghion, Hart and Moore's, and Adler and Ayres' models, have focused on the firm's valuation problem and suggested solving it by market mechanisms. The Gordian knot theory suggests, however, that it is impossible to attain the legislative objectives strictly by determining the firm's value efficiently while leaving allocation problems to bargaining and litigation. This Article further presents a new mechanism for public companies that overcomes this problem by structuring reorganization in a single shot that includes the allocation and reallocation of rights, while eliminating the need for bargaining and court proceedings. It is based on a firm's going-concern warning that auditors have to issue, explicitly indicating that there is substantial doubt as to whether the firm could remain solvent over twelve months. Under this mechanism, the warning initiates twelve months of voluntary rehabilitation. Then, if the warning is still valid, the junior classes will be able to buy out all of the senior classes at a price of the latter's claims, similar to Bebchuk's options model. A successful buy erases the original debt and, if the claimants do not purchase the firm, it is considered insolvent. This Article presents this mechanism--called the reorganization without bankruptcy mechanism--and discusses its advantages: inter alia, in the pre-bankruptcy period, the firm is solvent, it has not breached its contracts, and it is not involved in complex allocation disputes. These advantages bring the reorganization process in line with the legislative objectives, and allow firms to achieve rehabilitation by allowing for funding based on market mechanisms and management's sole discretion, providing management with incentives for adequate disclosure, and initiating rehabilitation based on objective criteria--all free of bargaining and litigation biases. [ABSTRACT FROM AUTHOR]

This article investigates the operation of voluntary administration in New Zealand from inception in 2007 to 2019. Voluntary administration is a formal insolvency procedure that is intended to maximise an insolvent company's chances of rehabilitation. Research undertaken for this article suggests that voluntary administration is not operating as was intended. It appears to have been underused and largely ineffective as a business rehabilitation mechanism. This article suggests that contributing reasons for the findings of the research include cost barriers for small businesses, a lack of confidence on behalf of creditors, and a misuse of voluntary administration by company directors. It proposes that useful reforms would be to reduce cost barriers and place limitations on when and how the procedure can be used. [ABSTRACT FROM AUTHOR]

The need to harmonize corporate insolvency legislation has led to the adoption by the European Union of the relevant regulations -- the Recommendation on a New Approach to Business Failure and Insolvency and the Directive 2019/1023 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (Directive on restructuring and insolvency). The purpose of the article is to reveal the essence of preventive restructuring, to assess the main differences in the definition of preventive restructuring in accordance with the provisions of the EU Directive and the Code of Ukraine on bankruptcy procedures. In this work, preventive restructuring is considered as the main tool for timely prevention of bankruptcy, the implementation of which in the EU member states has significant differences. An overview of the provisions of EU regulations on preventive restructuring and the process of their implementation in the member states was done. A comparative analysis of the EU directive on the mechanisms of preventive restructuring and certain provisions of the Code of Ukraine on bankruptcy procedures related to reorganization prior to the commencement of bankruptcy proceedings was carried out. It was found that the Code lacks such principles as early appeal, protection of new financing, taking into account the peculiarities of small and medium-sized businesses. Differences in the use of other principles were also identified. Ukrainian legislation encourages debtors to liquidate their business rather than to carry out financial restructuring. Taken into account the European vector of development, today Ukraine has a real chance to improve insolvency legislation based on the provisions of the EU Directive. [ABSTRACT FROM AUTHOR]

In this paper we analyze the relationship between the investment behavior of institutional managers who hold and trade shares of firms approaching bankruptcy and analyst recommendation changes for the firms in distress. When evaluating how institutions trade shares of distressed firms as they approach bankruptcy, we find that during the five-year period preceding bankruptcy filings institutional investors (except those managing investment companies) are net buyers with a positive abnormal net number of shares traded during the period as compared to a control sample. Institutional managers trade consistently with recommendations issued by security analysts. However, on average analysts do not materially downgrade their recommendations for the failing firms until only a few months prior to the Chapter 11 bankruptcy filings; consequently, the institutional managers' decisions to divest of shares of the firms may be too-little-too-late. Keywords: Analyst ratings, institutional investments, Chapter 11 reorganization, distress. 3EL classification: G11, G14, G23, G24, I. Introduction Institutional investors expend considerable sums of money to obtain information on the firms whose securities they own or are considering purchasing, institutions utilize both internal analysis and other, [...]

Copyright of Brazilian Business Law Journal / Administração de Empresas em Revista is the property of Administracao de Empresas em Revista and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We find that among firms that file Chapter 11 those that are smaller have better operating performance, and are in higher operating margin industries spend less time in Chapter 11. Firms are more likely to emerge as going concerns and to achieve positive post-reorganization profitability if they significantly reduce assets and liabilities while in Chapter 11. Higher pre-bankruptcy industry-adjusted operating margins and improvements in margin are associated with post-reorganization profitability but do not impact the decision to reorganize. These results reveal characteristics and actions associated with successful reorganizations and, furthermore, suggest that Chapter 11 allows promising firms to successfully reorganize. [ABSTRACT FROM AUTHOR]

Our paper explores a comprehensive sample of small and large corporate bankruptcies in Arizona and New York from 1995 to 2001. Bankruptcy costs are very heterogeneous and sensitive to the measurement method used. We find that Chapter 7 liquidations appear to be no faster or cheaper (in terms of direct expense) than Chapter 11 reorganizations. However, Chapter 11 seems to preserve assets better, thereby allowing creditors to recover relatively more. Our paper also provides a large number of further empirical regularities. [ABSTRACT FROM AUTHOR]

This article narrates the development of the law of business bankruptcy and reorganization from the equity receiverships of the late nineteenth century through the New Deal programs to Chapter 11 of the Bankruptcy Reform Act of 1978 and the more recent turn to market solutions such as asset sales. I argue that the rules applicable to business reorganizations were informed by changing cultural perceptions of corporate property and the needs of investors. For one thing, at the turn of the twentieth century, concerns over the growing separation of ownership from control in large publicly held corporations as well as an image of investors as vulnerable inspired the enactment of Chapter X of the Bankruptcy Amendatory Act of 1938. It sought to protect the individual, passive creditor against potential abuses of power by corporate managers. In turn, in the late twentieth century, a vision of the corporation as a nexus of contracts and of investors as sophisticated and capable of protecting their interests substantiated the 1978 overhaul of the rules applicable to business reorganizations. Rather than protecting creditors from those in control, Chapter 11 of the new bankruptcy code entrusted corporate managers with the task of reorganizing distressed firms through negotiations with the different classes of creditors and claimants. As this article concludes, by the turn of the twenty-first century, sophisticated investors joined with management to reorganize firms, typically outside Chapter 11, while individual, unsophisticated creditors were, for the most part, left defenseless. [ABSTRACT FROM AUTHOR]

Bankruptcy reorganizations are often thought to present unique problems requiring specialized doctrines. Equitable mootness is one such doctrine. This judge-made prudential limitation on appeal rights permits reviewing courts to dismiss otherwise justiciable appeals of bankruptcy court confirmations of reorganization plans. It applies where granting relief would disrupt the implementation of the plan or would harm reliance interests of parties affected by the plan. Chapter 11 reorganizations present complex multilateral negotiation problems. The bankruptcy represents a general default, pitting stakeholder against stakeholder in conflicts that require a global settlement. The plan of reorganization provides that global settlement through an interconnected web of compromises. Equitable mootness is justified by a need to protect those compromises against appellate challenge and, for most bankruptcy practitioners, the doctrine is viewed as necessary to protect the reorganization bargain. This Article challenges that notion. Although equitable mootness has considerable utility, it also has a dark side. Rather than simply protect reliance of innocent parties on completed transactions, equitable mootness has become a feature of the reorganization process. It is a tool that can be wielded by powerful parties to force a reorganization bargain over the dissent of weaker parties. Seen in this light, the utility of the doctrine is likely outweighed by its ill effects. [ABSTRACT FROM AUTHOR]

From the perspective of the global economic market with all the players from different industries, we see one important aspect that is present all the time, and that aspect is constant change. Looking back, you may say that this is nothing new, change has always been a constant factor in all life aspects, that's why humanity has evolved; and that is true, but change is different now. Today we experience change so fast that from the economic point of view, a company could go, from top to bottom in a matter of months. So, in order to survive in such an environment, companies us restructuring to secure business as a preventive and eventual business re-launch and not only when insolvency occurs, including a company reorganization procedure and bankruptcy procedure. As reported by a study that had been conducted by Cambridge University, the term "Corporate Restructuring" has been known in the world since the 1970s, when it was successfully applied to mergers and acquisitions, divisions sales, split-ups, financial recapitalization and private transactions in order to save renowned companies. The corporate restructuring process is a notion of corporate management for the legal reorganization, ownership, operational or other business structure of a company that has proved to be a difficult topic for managers of all around the world, companies undergoing the countless weather events that we live. Restructuring involves redesigning one or more aspects of a company, such as repositioning on the market to be more competitive, surviving in an unfavorable economic climate, or balancing the corporation to move in a new direction, it's a multidimensional process. [ABSTRACT FROM AUTHOR]

In bankruptcy, creditors exercise governance rights over a debtor firm--they vote to accept or reject a proposed plan of reorganization. These governance rights are apportioned based on the amount of a creditor's claim: one dollar, one vote. "This allocation assumes a claim reflects the creditor's true economic interest in the debtor, and the creditor is thus presumed to use its governance rights in the bankruptcy to maximize the value of the debtor, and hence its claim. Yet a creditor s financial interest is not always limited or even linked to the face amount of its claim. For example, the interest of employee creditors extends beyond recovering backpay to ensuring future employment, while a landlord's interest may be less in recovering back rent than in being abb: to terminate a lease so it can relet the property at a higher rate. Historically, this has been a discrete and manageable problem. Two recent developments in financial markets, however, have made the mismatch between a creditor's total economic interests and its claim-- and the concomitant governance rights-- more problematic. First, a robust market has arisen in distressed debt, enabling investors to purchase bankruptcy claims-- and thus governance rights-- at a discount. Second, the emergence of derivatives markets now enables investors to go short on the debtor and benefit from its misfortune. Combined, these developments enable investors to cheaply acquire governance rights in bankruptcy and then use that power to further the value of their extraneous interests rather than maximizing the value of their bankruptcy claim. As a result, the "one dollar, one vote" principle underlying bankruptcy governance is now in question. This Article illustrates problems that result from the divergence of economic interests and governance rights in bankruptcy. It shows that existing bankruptcy law tools, such as disclosure, vote designation, trading bars, equitable subordination, and equitable disallowance, fail to provide adequate remedies for the problems. Accordingly, we propose an administrable system of "mark-to-market governance," in which the governance rights, but not the economic distribution rights, associated with a creditor's bankruptcy claim would be adjusted to reflect the creditor's true net economic position. Under mark-to-market governance, hedgers and shorts would be subject to proportional dilution, claims purchasers ivould have their governance rights discounted based on purchase price, and secured creditors ivould have their credit bidding rights limited to the value of their collateral. Together these adjustments will promote the core bankruptcy policies of maximizing the value of the debtor firm and equitably distributing its vcdue. [ABSTRACT FROM AUTHOR]

Copyright of Revista de Contabilidade & Controladoria is the property of Revista de Contabilidade & Controladoria RC & C and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In an excerpt from their recently published book, New Deals: The Chrysler Revival and the American System, the authors explore the lessons to be learned from the Chrysler bailout and its implications for labor, management, government, and financial and social institutions. These lessons go beyond the question of "Did it work?" The narrow goals of the rescue were served and Chrysler was saved, but doubt remains as to whether it was the best response to the problems it sought to address and any attempt to generalize from the Chrysler experience should be made carefully. [ABSTRACT FROM AUTHOR]

Recent research has suggested that effective monitoring may assist firms in preventing an eventual bankruptcy filing. Audit committees, board subgroups responsible for monitoring and evaluating the financial health of the firm, may exhibit varying degrees of effectiveness in monitoring firms' decline as a function of their composition. Another monitoring body which has become increasingly important in the corporate community is institutional investors. This study investigates the extent to which audit committee composition and institutional investor holdings are related to the incidence and nature (prepackaged plans and length of time spent in reorganization) of firms' bankruptcy filings. Results demonstrate no association between affiliated director representation on audit committees or institutional holdings and the incidence of bankruptcy. These two monitoring groups are, however, associated with the nature of bankruptcy filing. Both audit committee composition and the level of institutional holdings are significantly related to a prepackaged filing and the length of time spent in reorganization during the 5-year period preceding a bankruptcy filing. [ABSTRACT FROM AUTHOR]

Bankruptcy and bankruptcy reorganizations have been identified as remedies for financial distress, but there is little agreement on their value to firms, managers, and the general economy. This paper provides a brief review of proposed bankruptcy strategies and some alternative views about their costs and benefits followed by an empirical study of the outcomes of 73 bankruptcies and subsequent reorganization efforts. The evidence suggests that there are few successful reorganizations, bankruptcy is a costly response to financial distress, and managerial choice in bankrupt firms is highly constrained by forces external to the firm. The diversity of stakeholder interests limits the value of global judgements about success or failure of bankruptcy strategies. Firm size dominates all other factors in predicting success in completing the reorganization process. Delayed filings primarily reflect failed efforts to avoid bankruptcy, not deliberate strategies. Reasons for the use of bankruptcy in spite of its high costs are discussed. [ABSTRACT FROM AUTHOR]

In this study, we assess the market response to information about firms whose future is assessed to be extremely problematic. This information is obtained from a new annual report and transformed by means of a financial-ratio model to provide signals for negative performance. The selected companies are then subjected to a series of tests that employed the residual methodology in different variants. The results are rather ambiguous; they differ from model to model and from one test to another. Based on two two-factor market model results, it appears that the market's realization of the firms' deterioration, as reflected by subsequent excess negative returns, persists for at least 12 months. Even if we are hesitant in accepting the significance tests, we should still be concerned with the consistent decline. However, when we employed the single-factor model, the results were consistent with other studies on market efficiency, i.e., the information is not new or, when it is new, the market reacts instantaneously. It should be remembered that tests of market efficiency are weak tests in the sense that we are simultaneously testing several hypotheses; that the signals provided by the multivariate model are new information; that the market reacts instantaneously; and the market model used to test market efficiency is correctly specified. Thus, it may very well be that the observed results are net a product of market inefficiency, but rather of model misspecification. [ABSTRACT FROM AUTHOR]

The article focuses on the empirical validation of bankruptcy avoidance as a motive for merger. The article reviews the relevant theory, summarizes the existing empirical research and its relevance to this discussion, describes sample characteristics and the authors' own tests, and considers the implications of the findings. The author confirms that, based on the data examined and a model of bankruptcy prediction, merger is a solution for financial stress. The author notes this contribution towards merger theory and the impact this action has in strengthening the position of firms at risk.

This paper investigates whether Chapter 11 bankruptcy provides a mechanism by which insolvent firms are efficiently reorganized and the assets of unproductive firms are effectively redeployed. We argue that incentives to reorganize depend on the level of demand and industry conditions. Using plant-level data, we find that Chapter 11 status is much less important than industry conditions in explaining the productivity, asset sales, and closure conditions of Chapter 11 bankrupt firms. This suggests that firms that elect to enter into Chapter 11 incur few real economic costs. [ABSTRACT FROM AUTHOR]

This study provides evidence that transactions costs discourage debt reductions by financially distressed firms when they restructure their debt out of court. As a result, these firms remain highly leveraged and one-in-three subsequently experience financial distress. Transactions costs are significantly smaller, hence leverage falls by more and there is less recurrence of financial distress, when firms recontract in Chapter 11. Chapter 11 therefore gives financially distressed firms more flexibility to choose optimal capital structures. [ABSTRACT FROM AUTHOR]

This article examines the performance of 197 public companies that emerged from Chapter 11. Over 40 percent of the sample firms continue to experience operating losses in the three years following bankruptcy; 32 percent reenter bankruptcy or privately restructure their debt. The continued involvement of prebankruptcy management in the restructuring process is strongly associated with poor post-bankruptcy performance. The substantial number of firms emerging from Chapter 11 that are not viable or need further restructuring provides little evidence that the process effectively rehabilitates distressed firms and is consistent with the view that there are economically important biases toward continuation of unprofitable firms. [ABSTRACT FROM AUTHOR]

The article focuses on various issues related to the valuation of the preferred stocks and bonds of corporations being reorganized under the U.S. Bankruptcy Act. The author states that the two basic principles given by the regulatory commission and the courts to reorganization plans are the valuation of the basis of capitalized expectable earnings and distribution of the over-all value. The article also discusses voluntary recapitalizations, public utility holding company act simplifications, and the principle of valuation. Several tables are presented to help illustrate the study.

The article focuses on the methods employed by the United States Interstate Commerce Commission (ICC) in distributing securities after the reorganization proceedings involving large scale railroads under Section 77 of the National Bankruptcy Laws. Details regarding the controversy generated over the distribution methods in the wake of rapid capital structure changes are provided. A thorough examination is presented into the policy determinants which define capitalization and interest bond values.

The article examines the effects of the principle of absolute priority (PAP) when applied under Chapter X of the U.S. National Bankruptcy Act. PAP describes how a bankrupt firm has its value assigned to various levels of creditors. The author presents empirical data for eight instances of corporate reorganizations that were consummated during the period 1941-1946. Analysis suggests that PAP does not always lead to an equitable distribution of value, with the interests of some creditors served at the expense of less senior creditors.