Originally Posted by
ContinentalFan
A very bad idea! Getting ridding of Chapter 11--as is easily inferred from the first paragraph--is a bad idea. Tightening up on the requirements for filing 11 isn't a bad idea. For example, US Airways should have gone out of business when it attempted to reorganize for a second time in nine months!!
Why would getting rid of Chapter 11 be a bad thing? Do you think it's helped the airline industry in the last 6~7 years? It's easy to argue that it distorts the market place by allowing some carriers to radically change their cost basis to the disadvantage of those that try to stay in business while allowing incompetent management (UA, US, and probably DL & NW) to stay in place so they can repeat the process.
Does Chapter 11 ever really serve the purpose of puting businesses back on their feet. Can you name a consistently profitable business truly world class that's emerged from Chapter 11? And before you mention it, Continental fails the consistent profit test.
Perhaps you're right that some of these areas can be tidied up. How about a rule of Chapter 11 being that nobody who was a Director and/or Executive in the 12 months prior to the filing can remain in position or get stock and/or options when the business emerges. That would focus the mind a bit and cause a bigger clear out of the deadwood, though I'm not sure how the business could operate in the first weeks after the filing?