Random Thoughts on Reform

I just finished discussing the “random walk” theory in my Corporate Finance class, so I thought I would close out my stint on Credit Slips with some “random thoughts” on reform.

First, two expressions of sincere gratitude: I want to thank Bob Lawless and everyone at Credit Slips for the opportunity to blog about reform these past two weeks. It has been great fun. I also would like to thank the many practitioners, judges, financial advisors, academics, and industry groups who participated in the ABI Commission reform study process. Everyone made a meaningful contribution to the project. 

Second, some random closing thoughts: I encourage people to take an honest and objective approach to reform. Although you may not agree with many (or even most) of the proposed principles in the ABI Commission Report, do we really want a chapter 11 process that works for some, but not all distressed companies and their stakeholders? Also, let’s continue not only the dialogue but also our study of the complicated and often nuanced issues that impact chapter 11 reorganizations. Here, I hope we embrace all forms of study—both empirical and non-empirical—recognizing the limitations of each and the need for a fully informed debate. For example, data often are focused on large cases and can analyze only known and readily accessible information. So in addition to existing empirical data, we also need to consider chapter 11 consequences for all constituents, smaller cases, and companies that never file (e.g., process is too expensive, resisted by management, not viewed as viable in current environment, etc.). And above all else, I hope the Report and my posts the past two weeks help to inform the debate and contribute to a robust discussion concerning chapter 11 reform.

*Note: The views expressed in this post are those of the author and are intended to spark a meaningful dialogue about chapter 11 reform. They are not attributable to the American Bankruptcy Institute or the ABI Commission to Study the Reform of Chapter 11.