Debtor-creditor types tend to focus on private creditors in the business of extending credit or loaning money. Of course, debtor-creditor relationships vary considerably and accordingly have rather different dynamics. The findings in several empirical studies of chapter 11 should keep us mindful about the significant role of the Internal Revenue Service as a creditor in bankruptcy and how tax obligations affect the bankruptcy initiation decision for small businesses. In the recent working paper Dynamics of Large and Small Chapter 11 Cases: An Empirical Study, Douglas Baird, Arturo Bris, and Ning Zhu analyze chapter 11 cases in the Southern District of New York and the District of Arizona between 1995 and 2001. Baird and co-authors find vastly different patterns of general unsecured creditor payout between the big cases and the small cases (short version: general unsecured creditors get paid very little in the small cases). Although perhaps not their main result, they also report that “The need to resolve tax obligations is the engine that drives the typical small chapter 11 case.” (pp. 19-20). In in-depth research on chapter 11 cases in the Northern District of Illinois, Baird and Ed Morrison similarly have found the IRS in a prominent role. In their 2005 Columbia Law Review article Serial Entrepreneurship and Small Business Bankruptcy, Baird and Morrison suggest that the IRS essentially encourages entrepreneurs to put their struggling businesses into chapter 11, where it will renegotiate the entrepreneur’s personal liability.  So notwithstanding the special collection entitlements the government gives itself, it seems that the IRS prefers to encourage the initiation of a costly bankruptcy process, with other parties footing the bill.