The 1978 Bankruptcy Reform Act was intended to make reorganization easier and more successful. However, the law may have removed so much of the risk from bankruptcy that filing is now considered an effective management strategy. Yet there are several practical, logical, public policy, legal, managerial, and definitional problems with the strategic use of bankruptcy. This article discusses these problems and argues that decision makers should not think of bankruptcy as a viable strategy but should rather concentrate on ways to prevent it.
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