The Beauty Show in Bankruptcies

Upstairs from a high-school mock-trial tournament at a Doubletree hotel in Wilmington, Del., about 100 bankruptcy lawyers and financial-turnaround advisers are shaking hands, exchanging furtive glances, and making snide remarks about the humiliation of their gathering.

Down the hall and behind a closed door in Salon J, creditors of recently bankrupted retailer Linens 'n Things Inc. are deciding whom to pick as their financial and legal advisers. Outsiders might call it a beauty pageant. The advisers are more likely to dub it a cattle call.

Still, bad news for the broader economy is welcome news for the advisers. It has ...