Here are our “Picks of the Month” for February 2006, a monthly guide to recently published articles of relevance to the bankruptcy practitioner, scholar, student, and Judge:
***Continue Reading Picks of the Month: Required Reading for February 2006

Here are our “Picks of the Month” for January 2006, a monthly guide to recently published articles of relevance to the bankruptcy practitioner, scholar, student, and Judge:
***Continue Reading Picks of the Month: Required Reading for January 2006

The following four bankruptcy-related working papers can be downloaded from the Social Science Research Network:
***
Columbia University Business School’s Kenneth Ayotte and Independent Consultant Yair Jason Listokin, Optimal Trust Design in Mass Tort Bankruptcy
***
University of Nebraska’s Susan D. Franck, Christians v. Crystal Evangelical Free Church: Interpreting RFRA in the Battle Among God, the Government, and the Bankruptcy Code
***
Georgetown Univ. Law School’s Milton C. Regan, Jr., Teaching Enron
***
Duke University Law School’s Steven L. Schwarcz, The Inherent Rationality of Judgment Proofing
***
Abstracts for each of these working papers follow:Continue Reading Four Bankruptcy-Related Working Papers Available for Downloading from SSRN

The following nine bankruptcy-related working papers can be downloaded from the Social Science Research Network:
***
Columbia Business School’s Kenneth Ayotte and Stav Gaon, Asset-Backed Securities: Costs and Benefits of Bankruptcy Remoteness
***
Yale School of Management’s Arturo Bris, Ivo Welch and Ning Zhu: The Costs of Bankruptcy
***
Purdue University Business School’s Diane K. Denis and NYU’s Business School’s Kimberly J. Rodgers, Chapter 11: Duration, Outcome, and Post-Reorganization Performance
***
Quinnipiac University Law School’s Stephen G. Gilles, The Judgment-Proof Society
***
Independent Consultant Michael Nwogugu, Decision-making, Risk and Corprate Governance: A Critique of Bankruptcy/Recovery Prediction Models
***
Duke University’s Steven L. Schwarcz, The Easy Case for the Priority of Secured Claims in Bankruptcy
***
Lawyer Michael St. James, Why Bad Things Happen in Large Chapter 11 Cases: Some Thoughts about Courting Failure
***
Wisconsin Law School’s Bernard Trujillo, Patterns in a Complex System: An Empirical Study of Valuation in Business Bankruptcy Cases
***
Boston College Law School’s Catharine P. Wells, Who Owns the Local Church? A Pressing Issue for Dioceses in Bankruptcy
***
Abstracts for each of these working papers follow:Continue Reading Nine Bankruptcy-Related Working Papers Available for Downloading from SSRN

Here are our “Picks of the Month” for December 2005, a monthly guide to recently published articles of relevance to the bankruptcy practitioner, scholar, student, and Judge:
***Continue Reading Picks of the Month: Required Reading for December 2005

Professor Stephen J. Lubben, a former Skadden Arps associate, now Seton Hall law professor, and no stranger to the phenomenon of “feasting” in bankruptcy, has just made available for the general public’s review his latest working draft of a paper entitled “The Microeconomics of Chapter 11 and the Irrelevance of Ex Ante Costs,” which is accompanied by the following abstract:

Several recent studies have put the level of professional fees in large chapter 11 cases at about 2.5 percent of assets or less. This compares favorably with other significant corporate transactions. But little attention has been given to the issue of how professional fees are allocated within chapter 11 cases. Examining this issue is important because a significant strain of bankruptcy scholarship is premised on the notion that chapter 11 is excessively expensive, notwithstanding the existing evidence that suggests otherwise. In particular, these theorists employ the long-recognized principle that lenders will recoup anticipated losses through higher ex ante interest rates to support the argument that altering or even replacing chapter 11 will reduce the costs of debt financing and thus promote efficiency. But if most of the supposed costs of chapter 11 are in fact exogenous to the Bankruptcy Code, reductions in the cost of chapter 11 may have only a modest correlation with reductions in the cost of financial distress.
This paper thus offers the first look at the intra-debtor distribution of professional fees. I analyze a new sample of almost 4,000 attorney time entries, from more than 30 law firms, in 27 very large chapter 11 cases filed between 2001 and 2003 to look at several basic questions regarding the allocation of attorney’s fees within chapter 11 cases. I find that up to 60% of the professionals fees in a bankruptcy case may be exogenous to chapter 11. I then develop the broader argument that ex ante costs are virtually irrelevant to current discussions of chapter 11.

Professor Lubben’s analysis provides a good summary of the current state of research on professional fees associated with chapter 11 cases, and adds a unique perspective by focusing his analysis on law firm microeconomics. I found especially interesting his analysis under the sub-heading, “Staffing in Chapter 11” at pages 26-33 (where he even quotes from a book by Sol Stein entitled A Feast for Laywers, referenced here).
According to Professor Lubben, the data he examined suggests a counterintuitive result: that is, the bulk of hours billed in a case is more concentrated among “mid-level” attorneys (whose average billable rate is between about $350 and $450 per hour) than their more senior or junior counterparts. These mid-level attorneys, the data suggests, bill 25%-30% more hours on average per month than more senior or more junior attorneys working on the case (whose average billable rate is around $625 for the more senior attorneys and $260 for the more junior attorneys). Professor Lubben says he had predicted the data would fall along a relatively straight upward sloping line, with the most senior attorneys working the least number of hours per month (to the far left of the graph) and the most junior attorneys slaving away the hardest (to the far right of the graph). Instead, Professor Lubben notes, the data suggests that legal fees in large chapter 11 cases actually form a horseshoe (or upside-down “U”) shaped curve, with time most heavily concentrated in the middle (where fat often concentrates) among mid-level attorneys/associates.
Professor Lubben is not sure what all this means, or even whether his data is reliable because he didn’t have complete access to law firm billing records. Still, he doesn’t shy away from asking the tough questions suggested by the data, such as:Continue Reading Who’s Really Feasting in Chapter 11 Cases? Professor Lubben Provides a New Perspective on This Perennial Question

Here are our “Picks of the Month” for November 2005, a monthly guide to recently published articles of relevance to the bankruptcy practitioner, scholar, student, and Judge:
Continue Reading Picks of the Month: Required Reading for November 2005

The following six bankruptcy-related working papers can be downloaded from the Social Science Research Network:
***
University of Texas Law School’s A. Mechele Dickerson: “Words that Wound: Defining, Discussing, and Defeating Bankruptcy ‘Corruption’.”
***
Harvard Law School’s Ethan Bernstein: “All’s Fair in Love, War & Bankruptcy?: Corporate Governance Implications of CEO Turnover in Financial Distress.”
***
Boston College Law School’s Catharine P. Wells: “Who Owns the Local Church? A Pressing Issue for Dioceses in Bankruptcy.”
***
Syracuse University Law School’s Gregory L. Germain: “Income Tax Claims in the Year of Bankruptcy: A Congressionally Created Quagmire.”
***
University of Reading’s Charles Grant and Institute for the Study of Labor’s Winifried Koeniger: “Redistributive Taxation and Personal Bankruptcy in US States.”
***
Texas A&M’s Li Gan and Washington University’s Tarun Sabarwal: “A Simple Test of Adverse Events and Strategic Timing Theories of Consumer Bankruptcy.”
***
Abstracts for each of these working papers follow:Continue Reading Six Bankruptcy-Related Working Papers Available for Downloading from SSRN