University of Chicago Law School

Part four: Bankruptcy Inc.

Part four: Bankruptcy Inc.

Somewhere in the third year of Tribune Co.'s marathon Chapter 11 proceeding, U.S. Bankruptcy Judge Kevin Carey looked out at a Delaware courtroom packed with high-priced attorneys and conceded the case had broken down into what he called a "multiconstituent melee."

"The parties are represented by some of the best lawyers in the field," he said. "You know how to fight well ... but nobody ends up the better for it, really."

Carey was trying to make a point about the foundation of bankruptcy law, which recognizes that a company and its creditors are better off hammering out a settlement than fighting endless court battles.

But his...