Chapter 11 bankruptcy protection is supposed to allow companies to shed debt and get a fresh start. Ideally, creditors recover most of what theyre owed as the restructured firm begins turning a profit.
Yet, more companies are liquidated than rebuilt, giving up the second chance at success that the law aims to encourage. In the process, these liquidations ultimately shortchange creditors by billions of dollars a year, according to new research by Harvard Business School Assistant Professor Samuel B. Antill, who studied three decades of court filings.
Chapter 11 allows for reorganization, which sounds like such a great thing. People get to keep their jobs, the creditors get paid equity, and the customers don’t lose this business that th…
Read the full article at: https://hbswk.hbs.edu/item/why-bankruptcy-spells-death-for-too-many-businesses
