Aghion, Philippe 
ORCID: 0000-0002-9019-1677, Hart, Oliver and Moore, John
(1992)
The economics of bankruptcy reform.
CEPDP (93).
London School of Economics and Political Science. Centre for Economic Performance, London, UK.
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.
| Item Type: | Monograph (Discussion Paper) |
|---|---|
| Official URL: | http://cep.lse.ac.uk |
| Additional Information: | © 1992 the authors |
| Divisions: | Financial Markets Group Centre for Economic Performance Economics |
| Subjects: | H Social Sciences > HD Industries. Land use. Labor |
| Date Deposited: | 20 Aug 2008 15:38 |
| Last Modified: | 11 Dec 2024 18:18 |
| URI: | http://eprints.lse.ac.uk/id/eprint/21032 |
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