Success Rate of Chapter 11
The success rate of Chapter 11 bankruptcy can be measured in various ways, including the rate of plan confirmation and the long-term survival of companies post-bankruptcy.
- Plan Confirmation Rate: The baseline probability of confirming a plan in traditional Chapter 11 cases is 32.9%. In contrast, Subchapter V cases are 21 percentage points more likely to have a plan confirmed, with a faster confirmation process (24% faster). 2
- Post-Bankruptcy Survival: Subchapter V cases have a higher post-bankruptcy survival rate, with an estimated 22 percentage points increase in firm survival for cases with liabilities between $4 million and $11 million. 2
- Long-Term Success: Some companies have successfully emerged from Chapter 11 and gone on to thrive, such as General Motors, Marvel Entertainment, and Delta Airlines. 45However, the success of Chapter 11 depends on various factors, including the company's ability to restructure effectively, maintain operational integrity, and secure stakeholder support. 3
- Repeat Filings: Despite these successes, there is a significant number of repeat Chapter 11 filers, indicating that not all companies are able to make the necessary changes to revive themselves successfully the first time around. 6