What’s Wrong with Chapter 11?

The time has come to cast a discerning eye at chapter 11 and examine how it is currently broken and what fixes can be made to improve it. This Article first explains what the congressional reformers of the 1970s dreamed that chapter 11 could and should be, and identifies five core normative goals that chapter 11 should promote. I then examine how chapter 11 has failed, and has become a nightmare rather than a dream, and discuss five critical ways in which chapter 11 in practice fails to achieve the normative ideals previously identified. I conclude by identifying and explaining seven possible reforms that, if implemented, could help transform chapter 11 from the current nightmare to the normative ideal dream: (1) making sales once against just sales again; (2) resurrecting the “perishability” or “emergency” test for sales; (3) limiting secured creditors to foreclosure value; (4) opening up DIP financing terms and eliminating draconian terms; (5) eliminating all preferential priority-altering payments; (6) curtailing venue choice and forum shopping; and (7) eradicating judicial legislation.