Five essays on bankruptcy

Chapter 2 Bankruptcy Initiation In The New Era of Chapter 11 2.1 Abstract The bankruptcy act of 1978 placed corporate managers (as debtor in possession) in control of the bankruptcy process. Between 2000 and 2001 managers apparently lost this control to secured creditors. This study examines financial ratios of firms filing for bankruptcy between 1993 and 2004 and tests the hypothesis that the change from manager to creditor control created or exacerbated the managerial (and dominant creditor) incentive to delay bankruptcy filing. We find a clear deterioration in the financial conditions of firms filing after 2001. This is consistent with managers (or creditors who control them) delaying filing for bankruptcy. We also observe patterns of operating losses and liquidations that suggest adverse economic consequences from such delay. Chapter 3 Bankruptcy Resolution: Priority of Claims with the Secured Creditor in Control 3.1 Abstract We present new evidence on the violation of priority of claims in bankruptcy using a sample of 222 firms that tiled for Chapter 11 bankruptcy over the 1993-2004 period. Our study reveals a dramatic reduction in the violations of priority of claims compared to research on prior periods. These results are consistent with changes in both court practices and laws transferring power to the secured creditors over our sample period. We also find an increase in the time from the date of a bankruptcy filing to reaching plan confirmation where priority is not violated. Chapter 4 Bankruptcy Resolution: Speed, APR Violations and Delaware 4.1 Abstract We analyze speed of bankruptcy resolution on a sample of 294 US firms filing for bankruptcy in the 1993-2004 period. We find strong association between type of Chapter II filing and speed of bankruptcy resolution. We also find that violations to the absolute priority rule reduce the time from bankruptcy filing to plan confirmation. This is consistent with the hypothesis that creditors are willing to grant concessions in exchange for faster bankruptcy resolution. Furthermore, after controlling for the type of filing and violations to the absolute priority rule, we do not find any difference in the duration of the bankruptcy process for firms filing in Delaware, New York, or other bankruptcy districts. Chapter 5 Financial Distress and Corporate Control 5.1 Abstract We examine the replacement rates of directors and executives in 63 firms filing for bank ruptcy during the 1995-2002 period. We find that over 76% of directors and executives are replaced in the four year period from the year prior to the bankruptcy filing through three years after. These rates are higher than those found in prior research and is consistent with changes in bankruptcy procedures and practice (i.e. the increased secured creditors control over the process due to both DIP financing and changes in the Uniform Commercial Code) having a significant impact on the corporate governance of firms in financial distress. Chapter 6 Financial Statement Restatements: Decision to File for Bankruptcy 6.1 Abstract On a sample of 201 firms that restated their financial statements we analyze the process of regaining investor trust in a two year period after the restatement. We find that 20% of firms that restate their financial statements tile for bankruptcy or restructure out of court. Our results also indicate that the decisions to change auditor or management is correlated with a higher probability of failure. Increased media attention appears to partly explain the decision of firms to restructure their debt or tile for bankruptcy.

Consumer Advisory: Foreclosure Rescue Scams, February 2014

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Foreclosure Rescue Scams

Consumer Advisory: Your Credit Report & Credit Score, March 2014

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Your Credit Report & Credit Score

Consumer Advisory: Your Credit Report & Credit Score, March 2014

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Your Credit Report & Credit Score

Consumer Advisory: Home Repairs & Home Improvements, April 2014

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Home Repairs & Home Improvements

Consumer Advisory: Unauthorized Charges & “Free Trial” Offers, May 2014

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Unauthorized Charges & “Free Trial” Offers

Consumer Advisory: The Drive to Destroy: Removing data from computer hard drives, storage devices & wireless phones, June 2014

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: The Drive to Destroy: Removing data from computer hard drives, storage devices & wireless phones

Consumer Advisory:Student Loan “Rescue” Companies Are No Lifeline! July 2014

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about:Student Loan “Rescue” Companies Are No Lifeline!

Consumer Advisory: The Drive to Destroy: Heath Fraud: Protecting Your Wellness and Your Wallet, August 2014

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: The Drive to Destroy: Heath Fraud: Protecting Your Wellness and Your Wallet

Consumer Advisory: How to Hinder Hackers? Protect Your Password! Tips to better secure your computer and online accounts, September 2014

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: How to Hinder Hackers? Protect Your Password! Tips to better secure your computer and online accounts

Consumer Advisory: Hold the Line on Annoying Robocalls How to respond to unwanted or illegal prerecorded robocalls October 2014

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Hold the Line on Annoying Robocalls How to respond to unwanted or illegal prerecorded robocalls

Consumer Advisory: Smarter Holiday Shopping Holiday season shopping tips for consumers, November 2014

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Smarter Holiday Shopping Holiday season shopping tips for consumers

Consumer Advisory: First You Win, Then You Lose Prize, sweepstakes and international lottery scams, December 2014

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: First You Win, Then You Lose Prize, sweepstakes and international lottery scams

Consumer Advisory: Tax Time Scams & Tips, January 2015

The Attorney General’s Consumer Protection Division receives hundreds of calls and consumer complaints every year. Follow these tips to avoid unexpected expense and disappointments. This record is about: Tax Time Scams & Tips