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Article: The uses and abuses of Chapter 11.
- Article from:
- The Economist (US)
- Article date:
- March 18, 1989
CopyrightCOPYRIGHT 1989 Economist Newspaper Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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The uses and abuses of Chapter 11
CHARLES LAMB, an eighteenth-century English essayist, reckoned that all bankrupts should be hanged. Fortunately for Mr Frank Lorenzo, chairman of Texas Air, American law is lenient. Six years ago Continental Airlines, which is owned by Texas Air, filed under Chapter 11 of the bankruptcy code. Last week another part of Mr Lorenzo's empire, Eastern Air Lines, followed suit. Today, Continental is one of America's most profitable airlines; Eastern, the fifth-largest bankruptcy in American history, may yet join it. But how can America have a system where going bankrupt does not mean going bust?
The reason is Chapter 11. Many ...