Chapter 11 Case Management and Delay Reduction: An Empirical Study01 Jan 1996
Chapter 11 bankruptcy cases will drag on interminably if judges let them. The recent nine-month O.J. Simpson trial was short compared to the careers of some chapter 11 bankruptcy cases. The typical duration of chapter 11 cases can be reduced remarkably, however, through moderate judicial case management.
The data in this study show that relatively modest judicial case management can squeeze a substantial amount of delay out of chapter 11 cases within the context of the present bankruptcy law. The case management program in this study, applied to 81.2% of the chapter 11 case load, shortened by 24.1% the time to confirmation of a chapter 11 plan in a typical case; it reduced by 44.1% the time to conversion to a case under another chapter of the Bankruptcy Code; and it shortened by 53.5% the time to dismissal of a typical nonviable chapter 11 case. The overall time until disposition of a chapter 11 case was diminished by 45.4%.
While these remarkable results were obtained, the impact of the outcome of the cases was rather modest. There was a slight increase in the rate of plan confirmations. However, there was an 18.5% increase in the number of dismissals and a corresponding decrease in the conversions to other chapters.
It is important to emphasize that these changes in the handling of chapter 11 cases occurred within the confines of the present Bankruptcy Code. The reduction in time to disposition of a chapter 11 case can be accomplished with absolutely no change in the statute of the Federal Rules of Bankruptcy Procedure. It only requires judges to adopt judicial management techniques authorized by existing law.
This Article does not suggest that the particular model of chapter 11 case management reported in this study, referred to as "fast track" management, is the only appropriate type of judicial chapter 11 case management, or even the best. This study reports on this particular fast track model principally because it is the only model for which good data are available and because it is very effective in reducing delays in the chapter 11 process. Some sort of judicial case management is good for the bankruptcy system, creditors, and perhaps even debtors as well.