Measuring The Costs Of Chapter 11 Cases

Transcription

1 Measuring The Costs Of Chapter 11 Cases Professional Fees in American Corporate Bankruptcy Cases Proefschrift ter verkrijging van het doctoraat in de Rechtsgeleerdheid aan de Rijksuniversiteit Groningen op gezag van de Rector Magnificus, dr. F. Zwarts, in het openbaar te verdedigen op donderdag 25 november 2010 om uur door Stephen James Lubben geboren op 30 augustus 1971 te Massachusetts, Verenigde Staten van Amerika

2 Promotor: Prof. dr. O. Couwenberg Beoordelingscommissie: Prof. dr. A. de Jong Prof. mr. B. Lawless Prof. mr. F.M. J. Verstijlen

3 Measuring The Costs Of Chapter 11 Cases Professional Fees in American Corporate Bankruptcy Cases Stephen J. Lubben Daniel J. Moore Professor of Law Seton Hall University School of Law Eleven International Publishing The Hague 2010

4 Published, sold and distributed by Eleven International Publishing P.O. Box CG The Hague The Netherlands Tel.: Fax: Website: Eleven International Publishing is an imprint of Boom uitgevers Den Haag. Cover design: Primo!Studio, Delft Layout: Textcetera, Den Haag 2010 S.J. Lubben Eleven International Publishing, The Hague This publication is protected by international copyright law. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. ISBN NUR 828

5 Acknowledgements This dissertation is probably unlike most others, in that the author is already a tenured professor. Thus, much of the anxiety normally associated with the project was absent, and instead I found the project to be a joy. My advisor and promoter, Prof. Dr. Oscar Couwenberg, deserves much of the credit for making the project so enjoyable. Not only did he guide me through the unfamiliar waters of the Dutch university system, but his comments on each of the chapters greatly improved the end result. Hopefully much future collaboration is yet to come. Many thanks also to the members of my dissertation committee, Abe de Jong, Robert Lawless and Frank M.J. Verstijlen, Seton Hall University School of Law and Dean Patrick Hobbs, for supporting my sabbatical project, the New York Socie ty Library, where I wrote much of this dissertation, Bloomberg LP, which provided some additional data for this project, and Ana Santos and Silvia Cardoso at Seton Hall for their help in formatting this manuscript. I should also thank Professor Elizabeth Warren, my LL.M. thesis advisor ten years ago at Harvard Law School, who first got me interested in measuring the costs of chapter 11, and the late Professor Clark Byse, of both Harvard and Boston University School of Law, who first got me interested in becoming a law professor. I am extremely appreciative of the support of my family. My daughter Vivian simply wants it to be known that she helped. Our dog Myrna, whom I still miss very much, faithfully slept by my side while Oscar and I planned the early stages of this project. As always, my greatest thanks go to my wife, Jennifer Hoyden, who has edited, corrected, and improved this manuscript from start to finish. She plays the biggest part in everything I do. Stephen J. Lubben Friday, June 4, 2010

6 * * * This dissertation is based in part on data gathered by the author as part of the ABI Chapter 11 Professional Fee Study, which was funded by a grant from the American Bankruptcy Institute, the ABI Endowment Fund, and the National Conference of Bankruptcy Judges. I am grateful for the ABI and NCBJ s assistance with this project. All conclusions are my own and do not necessarily reflect the views of the ABI or the NCBJ or their members.

7 Contents Acknowledgements V I Introduction 9 II Prior Studies 13 III The Datasets 23 A. Descriptive Statistics 29 B. Defining Debtor Size 33 IV The Direct Costs of Chapter A. Measuring Chapter 11 Cost 37 B. Determinants of Cost 41 C. The Model 48 D. The Random Sample 57 V The Bankruptcy Attorneys 63 A. Measuring the Role of Lead Attorneys 63 B. Modeling the Cost of Debtor Attorneys 68 C. Modeling the Cost of Committee Attorneys 73 VI Financial Advisors & Turnaround Consultants 77 A. Prevalence and Cost of Financial Advisors 79 B. Modeling the Cost of Financial Advisors 82 C. The Debtors Financial Advisors & Turnaround Consultants 84 VII Summary and Conclusion 87 A. English Version 87 B. Dutch Version/Nederlandse versie 88

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