William H. Widen
The issue begins with a study by Professor William H. Widen,
Report to the American Bankruptcy Institute: Prevalence of
Substantive Consolidation in Large Public Company Bankruptcies From
2000 to 2005. The study examines the frequency of the
use of the doctrine of substantive consolidation in large public
company bankruptcies from 2000 to 2005 as well as the extent to
which reorganization negotiations occur "in the shadow of the
doctrine of substantive consolidation." The report illustrates the
significance of substantive consolidation in the reorganization and
liquidation of large public company bankruptcies. Moreover,
the report concludes that the popularity of substantive
consolidation in these bankruptcies brings to light the
unreliability of using the simple asset partition formed by a legal
entity to match assets with liabilities and that asset partitioning
can only partly explain the structure of consolidation groups.