Bankruptcy scholars have long organized their field around a stylized story, a paradigm, of lender control. When lenders extend credit, the story goes, they insist on the borrower agreeing to strict covenants and granting blanket liens on its assets; then, if the borrower later encounters financial distress, they use their bargained-for rights as prods to steer the company toward a resolution favorable to themselves, whether or not that resolution is value maximizing for the investors as a group. As fruitful as the lender-control heuristic has been, however, it no longer corresponds to reality.

This Article introduces a new interpretive paradigm that better accounts for a changed world. Today, more often than not, equity sponsors rather than senior lenders have practical control over the way that distressed companies respond to their financial problems. Lenders no longer hold the big sticks that they once wielded to establish precedence, and the people guiding today’s modal large, distressed business have powerful incentives to preserve the value of sponsor investments. The predictable effect of the new locus of control has been to stand familiar restructuring dynamics on their head. Indeed, a number of seemingly unconnected trends in reorganization practice may best be understood as resulting from sponsors’ first-order incentives to postpone a reckoning that might crystallize losses. Identifying the dynamics of sponsor control thus promises to shed light on a variety of scholarly and policy debates around corporate reorganization.

长期以来，破产学者围绕贷款人控制的程式化故事、范式来组织他们的领域。据说，当贷方提供信贷时，他们坚持要求借款人同意严格的契约并对其资产授予一揽子留置权；然后，如果借款人后来遇到财务困境，他们会利用他们讨价还价的权利作为刺激，引导公司做出有利于他们自己的解决方案，无论该解决方案是否对整个投资者来说都是价值最大化。然而，尽管贷方控制启发法富有成效，但它不再符合现实。

本文介绍了一种新的解释范式，可以更好地解释变化了的世界。今天，股权发起人而不是高级贷款人通常可以实际控制陷入困境的公司应对其财务问题的方式。贷款人不再持有他们曾经挥舞的大棒来建立优先权，指导当今模态的大型、陷入困境的企业的人有强大的动力来保持赞助商投资的价值。新控制点的可预见效果是让熟悉的重组动力倒转过来。事实上，重组实践中的许多看似无关的趋势最好理解为发起人推迟可能导致损失具体化的清算的一级激励的结果。