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Bankruptcy judges consider both value to creditors and harm to employees in deciding whether to liquidate or reorganize firms. This Article proposes to systematize what is currently an ad hoc trade-off by making bankruptcy law
explicitly counter-cyclical- that is, placing more weight on preserving employment during times of high unemploy­ment. Although the suggestion that bankruptcy law should consider em­ployment effects runs counter to decades of economic analysis of bankruptcy law, this Article bases its analysis on the traditional law and economics efficiency norm. During times of high unemployment, significant social benefits flow from maintaining employment, as evi­denced by the hundreds of billions of dollars that the government has recently spent to maintain employment.

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