In their 1990 pathbreaking study in the University of Pennsylvania Law Review, Lynn LoPucki and Bill Whitford were the first to provide a clear picture of large corporate reorganizations. They encountered a universe with a population of forty-three cases. Today it numbers more than a thousand, and it has evolved as it has expanded. One can take stock of how things have changed using the Bankruptcy Research Database (BRD), the tool that grew out of LoPucki and Whitford’s study. The BRD is the first source to which everyone turns to understand large bankruptcies. With hundreds of data fields for every case, it provides a window into the world of corporate reorganizations. It offers a synoptic view of how large reorganizations work and how they have changed over time.
Long before others noticed them, LoPucki and Whitford flagged the issues that dominate reorganization debates today. They showed that, even in the 1980s, asset sales were “already a common feature of Chapter 11 cases.” They highlighted the practice of those filing petitions choosing a forum that suits them. Recidivism is another problem they identified. Prepackaged bankruptcy is another phenomenon that they isolated. With the help of the BRD, it is possible to trace the evolution of what have become the most salient features of modern Chapter 11.
Observing change, however, is only a first step. One of the central lessons of Bill Whitford’s work, both in his collaboration with LoPucki and elsewhere, is the one the Wisconsin School imparts more generally. Naked statistics alone are not enough to take the pulse of legal phenomena. They provide rigor and structure, but interviews and close examination of the facts are essential to understanding what is going on. This is especially the case in bankruptcy. Then, as now, it is a closed universe in which a relatively small handful of lawyers develop practices largely invisible to outsiders. This is a world in which law and norms evolve together. This Essay sketches out some of the lines of inquiry that the BRD invites, but does not completely answer.
Although many bankruptcy debates have focused on the question of priority, it has become increasingly clear in recent years that the more relevant question for bankruptcy reform centers around control rights. It is the battle for control rather than competing theories of priority that tells the story of change in large reorganization practice over the last two decades. A number of academics have begun to talk about the importance of control in the last decade or so, but LoPucki and Whitford recognized the importance of the issue long before anyone else. Their examination of large cases showed that debates about absolute priority are a “tempest in a teapot.” Deviations from absolute priority were not the main event. More important is the way the law and the norms of bankruptcy and corporate law affect those who have their hands on the levers of corporate governance.