Aghion, P.;
Hart, O.;
Moore, J.;
(1992)
The economics of bankruptcy reform.
(NBER Working Papers
4097).
National Bureau of Economic Research: Cambridge, US.
![[thumbnail of 17806.pdf]](https://discovery.ucl.ac.uk/style/images/fileicons/application_pdf.png) Preview |
PDF
17806.pdf Download (420kB) |
Abstract
We propose a new bankruptcy procedure. Initially, a firm's debts are cancelled, and cash and non-cash bids are solicited for the 'new" (all-equity) firm. Former claimants are given shares, or options to buy shares, in the new firm on the basis of absolute priority. Options are exercised once the bids are in. Finally, a shareholder vote is taken to select one of the bids. In essence, our procedure is a variant on the U.S. Chapter 7, in which non-cash bids are possible; this allows for reorganization. We believe our scheme is superior to Chapter 11 since it is simpler, quicker, market-based, avoids conflicts, and places appropriate discipline on management.
| Type: | Working / discussion paper |
|---|---|
| Title: | The economics of bankruptcy reform |
| Open access status: | An open access version is available from UCL Discovery |
| Publisher version: | http://www.nber.org/papers/w4097 |
| Language: | English |
| UCL classification: | UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery.ucl.ac.uk/id/eprint/17806 |
Archive Staff Only
 |
View Item |
