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  • Writer's pictureKirk Hartley

Chapter 11 – Just Another Financial Management Tool – Will the Law Ever Catch Up ?

As described here and here by DealBook, American Airlines has now joined the parade of airlines taking their second (or third) cleansing bath in the waters of chapter 11. Once upon a time, a chapter 11 filing was considered a stain on the image of a corporation and its executives. But today, with the rise of financial engineering, a chapter 11 filing is just another management tool, used frequently to obtain a "do over" on contracts that prove inconvenient. And, bankruptcy courts also are much used to trump or ignore state laws on tort and contract claims, and to manage litigation. One wonders if bankruptcy law and state law will ever catch up and change in order to intersect well with modern realities.

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