About

Douglas G. Baird is the Harry A. Bigelow Distinguished Service Professor of Law at the University of Chicago Law School, where he has been a faculty member since 1980. He graduated from Yale College with a BA in English summa cum laude in 1975 and earned his JD from Stanford Law School in 1979, where he was elected to the Order of the Coif and served as Managing Editor of the Stanford Law Review. Before joining the faculty, he clerked for Judge Shirley M. Hufstedler and Judge Dorothy W. Nelson of the US Court of Appeals for the Ninth Circuit. Baird served as Dean of the Law School from 1994 to 1999 and has held various professorial roles, including Dean, Associate Dean, and Professor of Law. His research and teaching interests focus on corporate reorganizations and contracts, and he is the chair of the National Bankruptcy Conference. Baird has authored numerous books and articles on bankruptcy, contracts, and related legal topics, contributing significantly to the field of bankruptcy law and corporate reorganization.

Research topics

• Political Science
• Sociology
• Business
• Law
• Computer Science
• Law and economics
• Ancient history
• Accounting
• History
• Economics
• Geography
• Management

Selected publications

• Incentive Bargaining and Corporate Governance Conference of 2025 Edited Transcript

  SSRN Electronic Journal · 2026-01-01

  preprintOpen access1st authorCorresponding
  PublisherDOI

• Bankruptcy Minimalism

  SSRN Electronic Journal · 2025-01-01

  articleOpen access1st authorCorresponding
  PublisherDOI

• Guest editorial: The uncertain future of corporate reorganisation

  International Insolvency Review · 2025-01-01

  editorialOpen access1st authorCorresponding

  The law of corporate reorganisations has a bright future—with a few storm clouds. To understand where we are going and the challenges ahead, it is useful to look to the past to get our bearings. Many of the difficulties we face arise out of fault lines embedded in the law a long time ago. In the United States, two separate traditions gave rise to modern reorganisation practice.1 Each tradition occupied its own domain and was controlled and dominated by its own creditor constituency. One tradition began with what were called ‘friendly adjustments’.2 At the end of the nineteenth century, large wholesalers, such as Marshall Field and Carson Pirie Scott, sold dry goods to small retailers across the country on credit.3 Each of these had a large management team, and this team included a new breed of professionals—those who specialized in approving and collecting the debts these retailers owed. The credit men, as these professionals called themselves, formed a tight community. They were white collar, but not exactly upper crust. When small retailers faltered, they often owed money to many different wholesalers. The credit men who worked for the large wholesalers would coordinate their efforts to make the best of a bad situation. The credit men would shut down a dry goods business and liquidate its assets if the business had no future, but when the business was viable and the owner worthy, the credit men would agree to restructure the debt and give the business a second chance. Sometimes, these professionals had to deal with holdouts, troublesome local creditors who sought to make side deals with debtors or otherwise take actions contrary to the interests of creditors as a group. The credit men therefore welcomed and indeed were largely responsible for the 1898 Bankruptcy Act.4 The 1898 Act empowered the credit men as a group to compromise their claims against a common debtor and compel dissidents to go along with them. These restructurings depended upon the parties being able to bargain with one another and cooler heads prevailing. The system worked because the credit men all belonged to the same club. The second reorganisation tradition in the United States came from the rise of giant railroads at the end of the nineteenth century.5 These railroads spanned the continent and were financed haphazardly with private capital, much of it from Europe. Many of these national railroads were buffeted by financial distress. When this happened, investment bankers, like the down-market credit men, worked collaboratively with one another. They too all belonged to the same club, albeit a much tonier one than the credit men's. Investment bankers could also bargain with each other at a low cost. To put a railroad's fiscal house in order, J.P. Morgan and other investment bankers chose the exchange offer as their first line of attack. When an exchange offer worked, bondholders from all parts of the capital structure found it in their self-interest to trade their old bonds for new ones. Even when the railroad was insolvent, junior investors got something. Even out-of-the-money interests have option value. The simpler and more realistic capital structure left everyone better off. The new capital structure reflected reality. The new debt had a lower face amount, but it was worth as much or more. But sometimes, you could not get everyone to come along. You did not want a few malcontents to gum up the works and insist on being paid in full. Some coercion was necessary. The question was how to supply the necessary friendly persuasion. The investment bankers appropriated an existing legal procedure, the equity receivership, to squelch dissent. The investment bankers would find a cooperative federal judge who would appoint someone friendly to act as a receiver of the railroad. The vast majority in every class would agree on a plan that looked very much like an exchange offer. Everyone would get new securities roughly equal in value to their old securities, but with doable interest and principal payments. The investment bankers would then have the receiver conduct a foreclosure sale of the railroad. The investment bankers would credit bid the senior bonds. At this point, the investment bankers would own the entire railroad. They would put the assets in a new corporation and then distribute new securities according to the agreed-upon plan. Everyone cooperated. If you cooperated, you would be better off. And if you failed to cooperate, you would be left only with your share of the proceeds of the foreclosure sale, and this would be your share of nothing. Because the investment bankers would control the bonds of the vast majority who cooperated, they could credit bid and when someone credit bids, there are no proceeds. Everyone understood that the foreclosure sale at the heart of the equity receivership was a sham. The foreclosure sale was merely a useful legal fiction. The equity receivership solved a holdout problem. It was in effect a consensual and mutually beneficial exchange offer, supplemented with a little arm-twisting.6 The investment bankers involved in the equity receivership were not much troubled when they represented junior and senior investors at the same time. The investment bankers saw themselves as working together to advance the interests of both the senior and junior stakeholders to craft a plan that left them both better off. Again, they were doing an exchange offer that was just a little bit coercive. It gave firms sensible capital structures without lowering the value of anyone's stake in the firm. And it is important to remember that these equity receiverships were just restructurings of funded debt. Ordinary creditors such as trade creditors and workers were paid in full. These two traditions—the tradition of the credit men bargaining effectively with each other over a friendly adjustment and investment bankers orchestrating the equity receivership—continued to live beside each other, more or less comfortably, until a major piece of New Deal legislation in the late 1930s disrupted things.7 The reforms did leave the process for restructuring small businesses largely intact. Even with the reforms, this restructuring regime continued to work for small businesses for many decades thereafter. Indeed, the reforms may even have improved things. But, these New Deal reforms were a disaster for large reorganisations. These unfortunate reforms were well-intentioned efforts, spear-headed by economically ignorant law professors, to protect public investors in large firms. One of the things that the reformers did was take the foreclosure sale seriously. Because a reorganisation mimicked the form of a foreclosure sale, these academics believed a reorganisation had to have the same consequences as a sale.8 Unlike an exchange offer, a foreclosure extinguishes the rights of junior investors who are out of the money. Hence, the reformers concluded that each individual senior investor had to have the right to insist on being paid in full before anyone junior was paid anything. This particular reform ensured there would be hold-up issues in every case. Many other features of the New Deal reforms proved equally misguided. By the 1970s, it was plain that there was no effective way to reorganize large firms. In 1978, there was a wholesale reworking of the bankruptcy law. This reform fused reorganisation law's two traditions. This new Bankruptcy Code proved, after some growing pains, to be remarkably successful. The law itself was well-crafted.9 The foreclosure paradigm was scaled back dramatically. Senior classes of creditors as a group could prevent junior classes from participating, but a few dissenters within a class could not. The basic concepts of the Bankruptcy Code—such as the automatic stay and the avoiding powers—all made sense. The new regime was also flexible. For example, it allowed for going-concern sales of entire firms when that was value-maximizing. As important, a new generation of bankruptcy judges emerged. As a group, they were highly sophisticated and able. But critical features of earlier law—a commitment to bargaining and the foreclosure paradigm—were still baked into the 1978 Bankruptcy Code, and these cast a long shadow. The 1978 Bankruptcy Code, like both of its antecedents, depended critically upon bargaining among the creditors. The creditors form a committee. The committee sat down, and professionals bargained with each other and with the debtor. These professionals worked together collaboratively to form a future for the firm. The entire edifice of the Bankruptcy Code was premised on this bargaining being cost-effective. But bargaining is labour-intensive, and like any labour-intensive activity, bargaining becomes relatively more expensive over time. As is often noted, the number of man-hours it takes to produce a bolt of cloth today is a tiny fraction of what it was two centuries ago. By contrast, it still takes the same number of man-hours to play a Beethoven string quartet, and this number of man-hours is unlikely to go down any time soon.10 Bargaining in corporate reorganisations is at least as labour intensive as playing a string quartet. By its nature, bargaining cannot be mechanized. As a result, the cost of putting together a team of professionals and having them bargain with each other has grown enormously relative to other costs. Administrative expenses have long been a problem in bankruptcy, and it will only become worse. The problem is particularly acute when the business is small. By 2010, having credit professionals and their lawyers negotiate over their stakes in the reorganisation of a struggling restaurant or a small manufacturer seldom made economic sense. The legal fees themselves would quickly swallow the assets of the business. It was plain that the bargaining-based framework of Chapter 11 no longer worked for small businesses. Small business Chapter 11s disappeared in some places entirely. State-law mechanisms were tried, but they did not do as effective a job in preserving ongoing concerns. In 2019, a new subchapter was added to Chapter 11. Subchapter V provides firms with debt below a statutory cap with a restructuring mechanism that is much cheaper than a traditional Chapter 11. This new procedure now accounts for a growing number of all Chapter 11 filings, and it costs perhaps only a quarter as much.11 There are no committees.12 Plans can be confirmed by the judge without voting.13 There is still negotiation in these small business bankruptcies. Indeed, two-thirds of the plans that are confirmed are consensual, but a bankruptcy judge makes the ultimate decision about the viability of the business, with or without the consent of the creditors. And the rights of creditors are still respected. Reorganisation plans must ensure that secured creditors are paid the value of their collateral.14 And the general creditors receive the income that the business generates for at least 3 years.15 This income should fully compensate general creditors for the portion of the going-concern value of the business to which they can legitimately lay claim because so much of the value of the small business derives from the human capital of the entrepreneur, something to which the creditors have no right. What are we to make of this major transformation? It does confront the reality that bargaining was becoming relatively more expensive, but what happens when credit professionals who have skin in the game no longer have the final say? Subchapter V's ultimate success will turn on whether a bankruptcy judge can do the job originally entrusted to the collective judgment of the whether the business should live or modern bankruptcy judges do This is an In was of the that bankruptcy judges were for such a were only in the law. They were They about business. But this was an from When and looked at the they found that bankruptcy judges in the United States were at this of and they for Subchapter The and the are of Subchapter V debtors This in to the of Chapter 11 debtors before Subchapter And the reorganisations are to for small businesses has from to bankruptcy judges that are not going to more The first of V for It is too to whether this is working or whether it is It all on the But there are for It is one bright of the future of corporate reorganisations. should that the reorganisation of businesses with debt V's cap is not the in restructuring law. The number of these small Chapter 11s is but the assets involved are relative to the assets that are The is in the In the we are not to give a a The debtor is a giant There are who can be or on whether they are any face a capital structure problem. The is on funded not on trade Again, these reorganisations from the old equity receivership, something that was just an exchange offer with some with this we some large reorganisations that are just exchange by another There is a or plan that has among of funded debt. and every other of general creditor For it is as if Chapter 11 These of restructurings do leave some for have some too The judge a to the This may take more than a few But it does not take that much if all rights are being are on It is a major to the to protect a of highly sophisticated investors with the of and other creditors. These of creditors are not involved in the But even these Chapter 11s with them and costs. There is the automatic the of an and If all you are doing is funded little of this is necessary. Again, you just a judge to ensure that the rights of creditors are not being The future of corporate reorganisations may be one that restructuring law more in the of other legal For example, the Bankruptcy has a new Chapter It would a restructuring of financial debt on an but without all the other of Chapter 11. There would be no automatic There would be no on the of debt. The debtor would not for the sale, or of of or the of a of and the costs these with would become It is a future for one of corporate But where do we with large that more than some of the capital Chapter 11 often in these but as academics we on what is not working so What are the of The for large reorganisations from the New Deal decision to the foreclosure As noted, before these reforms, reorganisations of large firms were just with a little The exchange offer had been a foreclosure sale out of The sale paradigm was to be but the New Deal reformers did take it seriously. For because a reorganisation had the form of a foreclosure sale, it had to have the consequences of a foreclosure this foreclosure paradigm had In to an exchange offer, a foreclosure sale is a of rights are at the time of the are to a value. This is not but it does have the effect of the option value of junior is a major of the rights of bankruptcy when one investor has over but is in bankruptcy of bankruptcy the that the value of the assets will over time how much a junior or senior interest in that is The value of a junior stake in a is different if the a or a even if both trade for the same There is an to the but to the The with the the value of a junior interest in the relative to the junior interest in the It also a in the value of a senior interest in the relative to the In bankruptcy, the assets are at a in time. is The junior and senior interests in a and a with the same value are As a result, a necessary of a reorganisation law the 1930s is that the of a restructuring senior investors at the of junior This is in to an exchange offer that in leave everyone the capital structure better off. The more the reorganisation becomes an with and the more the will be to time and money to ensure that a does not the paradigm may not work any better in do not the value of stake the same may not be It is not as as that should share and But a reorganisation regime that the foreclosure paradigm its own of with For a long this was not The were and their junior stakeholders were not in a to much of a The were in and the did not their job as the interests of junior of these firms were by whether they the business not by how interests in the business were The about that the and quickly from the What them up at was the they would take if the up on their What to the old or any other was an This to doing relatively little to protect junior It did not them much that and junior creditors would be out if a bankruptcy were But things are different live in an in which private equity firms are in control of large businesses in financial distress. For a private equity the Chapter 11 restructuring of a is at best an expensive corporate reorganisation has the effect of out their stake in the even they would be in the money if they could out the business This equity firms will ensure that their in what are called management management is the job of to a different and less management is about in to and of It is to find in the that the debtor to up and effectively creditors. management bankruptcy and may even it from for this is a than a It is a if parties can put the of Chapter 11 has become expensive, even for large firms. the is an And in of the debtor is doing only what its Some creditors but they are who chose to play in this private equity firms are If they are too in their they will the of capital upon which they if private equity firms a creditors are to it in their But one can take a different These are so and the of lawyers so that in each new is an game of one only to another. who are not able to in advance every of private equity can If you this line of you may that judges should these of and everyone to to of should not have to that out in and all the in which their are from playing But this management before bankruptcy are the new can future reorganisations to time and on the of the many and that now are in the to There will be many actions and to debt. is the new you will about at parties with restructuring management are new in the that have in as a of the of the foreclosure They too are of reorganisation law's There is another in the of bankruptcy that can also be back to the foreclosure sale as our The foreclosure paradigm a sale, but no sale takes There is no that generates the regime is to more bargaining in the of This is a But be this is so It is not that bankruptcy judges are bad at To the the that bankruptcy judges give of value and that they are better at it over with them no how you do them. of value are As is often a is more than by a the bargaining and make it more expensive to You can to but when you one you often another. debtor has a plan that a class of creditors a a in the new or Because creditors are to the judge has a way to how much the new is the debtor The debtor cannot and put an value on a new If the debtor did the new the investors would just take the this are a They a problem. But there is a The debtor to find someone to the someone to to the in the that creditors This at a it often happens that the creditors who form the majority in the class offer to the these creditors who offer to supply the do it for a They just be who want to the debtor in its of And some may must confront a that with new and in the of corporate reorganisations. The debtor may be such as an as an way to the for the plan. The judge to if the the debtor for the is This is the new problem that from the old To a from an we to whether the debtor is too much for a is is a put The value of a in a way that the value of a does not. as as a for a plan of reorganisation does not have a The must be without many And we are about money In such as in the for the was This is just one of the that in a of The to these is when a reorganisation regime is to bargaining in the of a This is also of the future of corporate reorganisations. this that bargaining is not an end in Even bargaining is the of corporate it is a not a turn to one other that reorganisation law as a of its commitment to the foreclosure The foreclosure paradigm that the reorganisation is about claims against just the rights are in a reorganisation only to the that rights are to the assets being put up for But a reorganisation is about out the of a and these may claims against the legal There are and parties when we are about large firms. This is another collective problem. out financial may deals with many other as not on the And some of these not be Some may not have in the United may not be that are even for when a to in this but the found this that the Bankruptcy Code did not This decision should have no It from the in restructuring law that the is not empowered to actions against on of creditors even if creditors these actions only by of their with a common to the point, such a from the foreclosure as it is on out only the rights creditors have to the But be with the first of corporate It is to a reorganisation law in which a of creditors could agree to a in for stakes in the and other If the creditors in of their rights against it may make to the If everyone is the collective of the majority to parties may what makes for the group. such do not the of a reorganisation law. it a collective problem among creditors of a common debtor. in the United States not it that but we may not it only because we are so to the foreclosure paradigm and its of what reorganisation law Indeed, there are a few reorganisation that when out the with a corporate group. the of and other of we may a different of large one that the United States and that out in this country in Chapter than in Chapter 11. bankruptcy can from other as long as they are not contrary to public The question is one of in Chapter contrary to public at least if one can back from the foreclosure In a of large that and the reorganisation of one can that bankruptcy judges in the United States will be whether they should in Chapter This may be reorganisation law's future and one of its new This is one more with is important and should the of

  PublisherOA PDFDOI

• The Problem of Imputed Ownership

  SSRN Electronic Journal · 2025-01-01

  preprintOpen access1st authorCorresponding
  PublisherDOI

• BOOKKEEPING WITHOUT WRITING:

  Peeters Publishers eBooks · 2023-12-31

  book-chapterSenior author
  PublisherDOI

• The Boncuklu project

  Heritage Turkey · 2023 · 2 citations

  1st authorCorresponding
  • Computer Science
  • Computer Science
  PublisherDOI

• A Thumb on the Scale

  Cambridge University Press eBooks · 2022-05-05

  book-chapter1st authorCorresponding

  The sixth chapter looks at reorganization practice after the Second World War. The heavy regulatory oversight that New Deal reforms imposed on large firms was unsuccessful. Government regulators showed themselves to be insufficiently nimble. And the law depended too much on judicial valuations that proved too malleable and too uncertain. Moreover, although the norms of the credit men and the emphasis on accommodating worthy debtors worked tolerably well for small businesses, these norms offered judges no easy way to find their bearings elsewhere. Nowhere was this more evident than in real estate insolvencies.

  PublisherDOI

• Boncuklu and Pınarbaşı: from forager to farmer in central Anatolia

  Heritage Turkey · 2022 · 3 citations

  1st authorCorresponding
  • Geography
  • Ancient history
  • History

  In 2022, we conducted the 16th and final excavation season of the Boncuklu project and renewed excavations at Pnarba, one of the very few known Epipalaeolithic sites on the Anatolian plateau.

  PublisherOA PDFDOI

• The Credit Men

  Cambridge University Press eBooks · 2022-05-05

  book-chapter1st authorCorresponding

  This chapter focuses upon retail merchants and their suppliers at the start of the twentieth century. When small retailers at the start of the twentieth century encountered trouble, it fell to the credit professionals who worked for their faraway and unpaid suppliers to sort things out. These credit men, as they called themselves, did not tolerate debtors whom they deemed unworthy, but they believed that it was appropriate to give some debtors a second chance. Their solicitude for these “worthy debtors” combined notions of honor and decency with self-interest. They pressed for legal reforms to provide a check against the forces that interfered with their efforts to reach a “friendly adjustment” of debt. In the process, they changed what behavior between debtor and creditor was acceptable and what was not.

  PublisherDOI

• Index

  Cambridge University Press eBooks · 2022-05-05

  paratext1st authorCorresponding

  A summary is not available for this content so a preview has been provided. Please use the Get access link above for information on how to access this content.

  PublisherDOI

Frequent coauthors

• Robert K. Rasmussen

  42 shared

• Anthony J. Casey

  17 shared

• Edward R. Morrison

  University of Portsmouth

  14 shared

• Thomas H. Jackson

  13 shared

• David A. Skeel

  13 shared

• Randal C. Picker

  Chicago Kent College of Law

  12 shared

• Jeromin Zettelmeyer

  Bruegel

  6 shared

• Arturo Bris

  International Institute for Management Development

  5 shared

Awards & honors

• Order of the Coif (Stanford Law School, 1979)
• Harry A. Bigelow Distinguished Service Professor of Law (Uni…
• Dean of the Law School (University of Chicago, 1994-1999)
• LLD, honoris causa (University of Rochester, October 1994)