Shleifer, Andrei and Robert W. Vishny, "Liquidation Values and Debt Capacity: A Market Equilibrium Approach", Journal of Finance, Vol. 47, No. 4, (September 1992), pp. 1343-1366.
Abstract: We explore the determinants of liquidation values of assets, particularly focusing on the potential buyers of assets. When a firm in financial distress needs to sell assets, its industry peers are likely to be experiencing problems themselves, leading to asset sales at prices below value in best use. Such illiquidity makes assets cheap in bad times, and so ex ante variation in debt capacity across industries and over the business cycle, as well as the rise in U.S. corporate leverage in the 1980s.