Effects of bankruptcy court protection on asset sales

This paper uses commercial aircraft transactions to determine whether price s obtained from asset sales are greater under Chapter 11 reorganization tha n under Chapter 7 liquidation. Results indicate that prices obtained under both bankruptcy regimes are substantially lower than prices obtained by non -distressed airlines. Furthermore, there is no evidence that prices obtaine d by firms reorganizing under Chapter 11 are greater than those obtained by firms liquidating under Chapter 7. An analysis of aircraft sales indicates that Chapter 11 is also ineffective in limiting the number of aircraft sol d at discounted prices. (C) 1999 Elsevier Science S.A. All rights reserved.