MSU Law professor finishes work on national study of individual Chapter 11 bankruptcies

Michigan State University College of Law Professor Anne Lawton recently concluded work on the first comprehensive empirical study of individuals in Chapter 11 bankruptcy proceedings.

Individuals account for  more  than  a  third  of  chapter  11  bankruptcy  filings, and this share has grown over time. But little is known about these individuals, why they opt for chapter 11 (rather than the more structured chapter 13), and their success at confirming and performing their chapter 11 repayment plans.

With funding from the Anthony H.N. Schnelling Endowment Fund of the American Bankruptcy Institute, Professors Lawton, Richard Hynes of the University of Virginia School of Law, and Margaret Howard of Washington & Lee School of Law sought to answer these questions.

They found that individuals who use chapter 11 tend to have greater assets, debts, income and expenses than individuals in chapter 13, and that the overwhelming majority are operating some type of business or own significant real estate.

Among other things, the study found that individuals represented by experienced attorneys are much more likely to succeed in obtaining confirmation of their chapter 11 plans than debtors who represent themselves. These and other findings have significant implications for Congress and policymakers evaluating the effectiveness and fairness of our bankruptcy laws.

The Study was published in volume 25 of the American Bankruptcy Institute Law Review.