What makes more economic sense? A bankruptcy system that auctions a firm’s assets and distributes the proceeds among the creditors? Or one that allows a firm to seek to resume business after renegotiations between its stockholders and its creditors? Or is there room — or even a need — for both? Mitchell Berlin outlines current U.S. bankruptcy law and looks at recent research that has reopened the debate on the value of separate procedures for reorganizing the bankrupt firm.

This article appeared in the Third Quarter 2002 edition of Business Review.

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