Do Market Prices Improve the Accuracy of Court Valuations in Chapter 11? Journal Article uri icon

Overview

abstract

  • ABSTRACTThe average difference between the court value and postemergence market value of newly issued stocks in Chapter 11 reorganizations exceeds 50%. We show that public dissemination of transactions in defaulted bonds reduces this difference by 23% and largely eliminates interclaimant wealth transfers. The effects of dissemination are only significant when the bonds are sufficiently traded around the court valuation date and when they receive significant amounts of postemergence equity, indicating that the bond's value is sensitive to the size and allocation of the pie. These findings imply that security prices have real effects: they improve the valuations of bankruptcy participants.

publication date

  • April 1, 2022

Date in CU Experts

  • January 17, 2026 2:37 AM

Full Author List

  • DEMIROGLU CEM; FRANKS J; LEWIS R

author count

  • 3

Other Profiles

International Standard Serial Number (ISSN)

  • 0022-1082

Electronic International Standard Serial Number (EISSN)

  • 1540-6261

Additional Document Info

start page

  • 1179

end page

  • 1218

volume

  • 77

issue

  • 2