Title

Empirically Bankrupt

Abstract

Empirical legal scholarship endeavors to resolve disputes that are indeterminate at the level of theory. The nature of empirical claims, however, requires that consumers of this work bring a healthy dose of skepticism to any of these projects. Three recent works in the area of corporate reorganizations illustrate how a project that appears on its face to settle scholarly debate can rest on choices that the researcher made rather than on the data itself. One of these works seeks to discredit proposals to make bankruptcy law a default rule rather than a mandatory rule, but it draws its data from a sample half of which is made up of individuals, who by definition are outside the reach of the proposed reform. Moreover, the entire sample omits publicly held corporations, the main target of the reform being examined. The second article discredits prior reorganization practice, but only by establishing a standard that no bankruptcy system has ever satisfied. The third piece concludes that competition for large Chapter 11 cases has corrupted our bankruptcy system, but the empirical basis for this conclusion rests on combining fundamentally different types of bankruptcy cases. For empirical work to be credited, at a minimum, it has to look in the right place, ask the right question and draw the right inferences. When empirical work fails to cross this threshold, it conclusions must be rejected.

Disciplines

Bankruptcy Law

Date of this Version

March 2006