Bankruptcy Hardball

By many accounts, we have entered an era of unprecedented contentiousness in debtor-creditor relations.  For an example of the new status quo, consider the recent actions of PetSmart, a perfectly normal American corporation struggling with debt from a leveraged buy-out gone sour.  The textbook account of corporate governance would suggest that PetSmart’s board of directors would respond to this financial distress by seeking to improve the underlying business or, perhaps, by filing for Chapter 11 bankruptcy to maximize the value of the firm for the benefit of creditors.  Instead, PetSmart’s board authorized a transaction that seems shocking for a firm … Read more