Get in Line: Chapter 11 Restructuring in Crowded Bankruptcy Courts APPENDIX

In the text, I argue that dismissal from court is equivalent to liquidation for most firms. To verify this, I randomly selected 100 dismissed firms that filed for Chapter 11 and examined the reasons for their dismissal using court documents on the U.S. Court's Public Access to Court Electronic Records (PACER) system. In general, the reasons for dismissal can be sorted into four categories: (1) the debtor failed to follow court procedure, such as failure to file specific documents, failure to hire counsel, or failure to show up in court; (2) the debtor is deemed to have abused the system by filing in bad faith, or filing repeatedly without making efforts to repay its debts; (3) there is no possibility that the debtor can successfully reorganize; (4) the debtor has reached a settlement with its creditors and therefore no longer needs bankruptcy protection. Unsurprisingly, the reason for dismissal varies considerably depending on which party files the motion. When the trustee or court files the motion for dismissal, it is typically because the debtor did not obey a court order of some sort, but in a significant minority of cases it is also because there is no hope of reorganization. When a creditor files a successful motion the reason for dismissal is often because the debtor has abused the bankruptcy system in some way. Debtor-filed motions, however, are nearly equally split between debtors who have no hope of reorganizing, and who wish to leave bankruptcy and simply liquidate without incurring further legal fees, and debtors who have either found a buyer or have reached a settlement with their creditors. It should be noted that in many cases when a debtor sees no hope of reorganization and files for dismissal of the case the court has previously granted motions in favor of the creditors, such as lifting the automatic stay or denying the use