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- Title
Chapter 11: Duration, Outcome, and Post-Reorganization Performance.
- Authors
Denis, Diane K.; Rodgers, Kimberly J.
- Abstract
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.
- Subjects
BUSINESS failures; FINANCIAL crises; BANKRUPTCY; BANKRUPTCY reorganization; FINANCIAL performance; BUSINESS forecasting; BUSINESS valuation; CORPORATE reorganizations; PROFITABILITY
- Publication
Journal of Financial & Quantitative Analysis, 2007, Vol 42, Issue 1, p101
- ISSN
0022-1090
- Publication type
Article
- DOI
10.1017/S0022109000002209