I reexamine direct restructuring costs in light of recent developments
for reorganizing distressed firms, such as prepackaged bankruptcies,
failed highly leveraged transactions (HLTs), ''vulture'' investors, an
d pre-restructuring bondholder committees. Prepackaged bankruptcy cost
s are lower than in traditional Chapter 11 filings and have costs simi
lar to exchange offers. Fees in Chapter 11 are lower if the firm is an
HLT, but these savings decline as the ratio of public debt to total d
ebt increases. Direct costs of Chapter 11 are also lower when vulture
investors are involved in the restructuring, which is consistent with
the view of vultures as facilitating, rather than complicating, debt r
estructurings.