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Enron recovery chances threatened by court choice
BLOOMBERG, NEW YORK
Tuesday, Jun 04, 2002, Page 21
Enron Corp, Global Crossing Ltd and Polaroid Corp may have hurt their chances to emerge successfully from bankruptcy by filing for protection from creditors in New York and Delaware, a study suggests.
Half the companies that file for bankruptcy in Delaware go out of business, are acquired or go bankrupt again, the study said. About a third suffer the same fate after filing in Manhattan, compared with a national failure rate of 14 percent.
One reason for the disparity may be a tendency of Delaware and New York judges to duck tough decisions necessary to put a company back on its feet, the study found. The judges are "more willing to let the financial advisers and lawyers make all of the decisions," said Lynn LoPucki, a University of California at Los Angeles law professor and author of the study.
Bankruptcy cases in the US are continuing at a record pace, prompted in part by the recession that began in March 2001.
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