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The growing use of Chapter 11 by financially troubled firms has been accompanied by an increasing uneasiness in the academy over the normative desirability of such proceedings. Scholars have struggled to justify the law of corporate reorganizations, especially the existence and contours of Chapter 11. The conclusions that they have reached range across the spectrum. Some claim to justify Chapter 11 in its entirety,'others claim that they have shown that it is justified for certain types of firms but not others,'and still others believe they have demonstrated that Chapter 11 should not exist at all. 3 Even those who find some role for Chapter 11 do not universally approve of the current content of its provisions. 4

This failure to reach a consensus stems from a basic flaw contained in all of the theories of corporate-reorganization law offered to date. In short, those propounding these various theories err not so much in the …