The average difference between the court value and postemergence market value of newly issued stocks in Chapter 11 reorganizations exceeds 50%. We show that public dissemination of transactions in defaulted bonds reduces this difference by 23% and largely eliminates interclaimant wealth transfers. The effects of dissemination are only significant when the bonds are sufficiently traded around the court valuation date and when they receive significant amounts of postemergence equity, indicating that the bond's value is sensitive to the size and allocation of the pie. These findings imply that security prices have real effects: they improve the valuations of bankruptcy participants.A LARGE BODY OF LITERATURE EMPHASIZES the role of security prices in aggregating and disseminating market information and thereby guiding economic and financial decisions. 1 This has led to the creation of markets solely for the purpose of assimilating different views ahead of making final pricing decisions. For example, pre-IPO grey markets have been established to reduce uncertainty about a company's valuation and improve pricing efficiency of IPOs (Chang et al. (2017)). Market prices are also used as reference points in mergers (Baker, Pan, and Wurgler (2012)) and have been proposed by resolution Cem Demiroglu is at Koç University. Julian Franks is at London Business School. Ryan Lewis is at the University of Colorado-Boulder. We thank the Editor (Philip Bond) and two anonymous referees for very helpful comments that substantially improved the paper. We are also grateful to