Vanderbilt Law Review

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The war is over and Delaware has won. The "Delawarization" of bankruptcy law appears complete. The reorganization of a large, publicly held corporation under Chapter 11 of the Bankruptcy Code today will more likely take place in the Delaware Bankruptcy Court than in any other jurisdiction.' The bankruptcy judges and lawyers in Delaware are no doubt pleased with this state of affairs, while many of their counterparts in other jurisdictions look to Delaware with envy. While few question that Delaware is the preferred forum for public corporations seeking to reorganize, it remains hotly contested whether that is a good thing. In other words, the race is to Delaware; but is it to the top, the bottom, or somewhere in between?

To answer this normative question, one needs a theory explaining why the managers of a firm, advised by their lawyers, decide to file in one jurisdiction as opposed to another. Some have argued that firms prefer to file in Delaware because the Delaware Bankruptcy Court is the fastest and most efficient processor of Chapter 11 cases. Others see a nefarious attempt on the part of managers of firms to shop for a forum that will promote their interests at the expense of shareholders and creditors. Still others view the matter as more complex, suggesting that some of the reasons for going to Delaware are beneficial from the perspective of social welfare, while maintaining that other reasons are suspect. The normative desirability of the stampede to Delaware remains a contested issue.