Maksimovic, Vojislav and Gordon Phillips, "Asset Efficiency and Reallocation Decisions of Bankrupt Firms" Journal of Finance, Vol. 53, No. 5, (October 1998), pp. 1495-1532.
Abstract: This paper investigates whether Chapter 11 bankruptcy provides a mechanism by which insolvent firms are efficiently reorganized and the assets of unproductive firms are effectively redeployed. We argue that incentives to reorganize depend on the level of demand and industry conditions. Using plant-level data, we find that Chapter 11 status is much less important than industry conditions in explaining the productivity, asset sales, and closure conditions of Chapter 11 bankrupt firms. This suggests that firms that elect to enter into Chapter 11 incur few real economic costs.