The Economics of Bankruptcy Reform / Philippe Aghion, Oliver Hart, John Moore.

Format:

Book

Author/Creator:

Aghion, Philippe.

Contributor:

National Bureau of Economic Research.

Hart, Oliver.

Moore, John.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4097.

NBER working paper series no. w4097

Language:

English

Subjects (All):

Bankruptcy.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1992.

Cambridge, Mass. : National Bureau of Economic Research, 1992.

Summary:

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.

Notes:

Print version record

June 1992.