Cookies?
Library Header Image
LSE Research Online LSE Library Services

The economics of bankruptcy reform

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.

Full text not available from this repository.

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: 13 Sep 2024 19:33
URI: http://eprints.lse.ac.uk/id/eprint/21032

Actions (login required)

View Item View Item