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Abstract

This comment analyzes the role of the Securities and Exchange Commission (SEC) in corporate rehabilitation under the present Bankruptcy Act and the proposed New Bankruptcy Act. First, a general understanding of the distinction between Chapter X and XI is necessary. Then Section II examines why the SEC prefers a Chapter X bankruptcy proceeding over a Chapter XI bankruptcy proceeding and how that preference is effectuated. Section III gives a historical review of the major cases in which the SEC forced companies to use Chapter X, and attempts to derive a standard which courts will apply when faced with a debtor that wants to use Chapter XI, and an SEC recommendation for Chapter X. Finally, a critical analysis of the effect of Chapter VII of the proposed New Bankruptcy Act and the elimination of the SEC in corporate rehabilitation proceedings is examined in Section IV.

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