Rehabilitation, Redistribution or Dissipation: The Evidence for Choosing Among Bankruptcy Hypotheses

Authors

James W. Bowers, Louisiana State University Law Center

Publication Title

Washington University Law Quarterly

Abstract

This Article addresses that new redistributive view of bankruptcy in its two most typical versions-which I denominate the "Rehabilitative" and "Pure Redistribution" hypotheses, respectively-and argues that neither is consistent with the existing empirical data concerning corporate reorganizations. It then proposes a new thesis about bankruptcy which is inspired not only by the existing data, but also by new theoretical insights: that measures which avoid some kinds of market failures, such as externalities, entail their own kinds of costs, e.g., by fostering holdout behavior. The new thesis-that bankruptcy law tends to waste resources- I denominate the "Dissipative" thesis.

Recommended Citation

James W. Bowers, Rehabilitation, Redistribution or Dissipation: The Evidence for Choosing Among Bankruptcy Hypotheses, 72 Wash. U. L. Q. 955 (1994).
Available at: https://openscholarship.wustl.edu/law_lawreview/vol72/iss3/14