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An Economic Evaluation of Insolvency Procedures in the United Kingdom: Does the 1986 Insolvency Act Satisfy the Creditors' Bargain?

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  • Webb, David C

Abstract

The creditors' bargain view of insolvency law argues that solvency stats rights should be preserved in insolvency states. It argues that insolvency law should be an extension of commercial law. This paper examines the Insolvency Act (1986) in the United Kingdom from the perspective of the creditor's bargain. It argues that the receivership systems supplemented with the new administration procedures preserves initial rights. The paper argues that this is a structure conducive to economic efficiency. It casts doubt on whether we need a formal reorganization procedure, like Chapter 11 of the United States Bankruptcy Code (1978), which allows a third party to arbitrate and encourages inefficient distributional games. Copyright 1991 by Royal Economic Society.

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  • Webb, David C, 1991. "An Economic Evaluation of Insolvency Procedures in the United Kingdom: Does the 1986 Insolvency Act Satisfy the Creditors' Bargain?," Oxford Economic Papers, Oxford University Press, vol. 43(1), pages 139-157, January.
    • Handle: RePEc:oup:oxecpp:v:43:y:1991:i:1:p:139-57
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    Cited by:

    1. Francesca Cornelli & Leonardo Felli, "undated". "Revenue Efficiency and Change of Control: The Case of Bankruptcy," Rodney L. White Center for Financial Research Working Papers 18-98, Wharton School Rodney L. White Center for Financial Research.
    2. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    3. Cornelli, Francesca & Felli, Leonardo, 1998. "Revenue efficiency and change of control: the case of bankruptcy," LSE Research Online Documents on Economics 119139, London School of Economics and Political Science, LSE Library.
    4. Detragiache, Enrica, 1995. "Adverse selection and the costs of financial distress," Journal of Corporate Finance, Elsevier, vol. 1(3-4), pages 347-365, April.
    5. Iraj Hashi, 1995. "The Economics of Bankrupcy, Reorganisation and Liquidation: Lessons for East European Transitional Economies," CASE Network Studies and Analyses 0041, CASE-Center for Social and Economic Research.
    6. Araujo, Aloisio P. & Ferreira, Rafael V.X. & Funchal, Bruno, 2012. "The Brazilian bankruptcy law experience," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 994-1004.
    7. Michelle J. White, 2005. "Economic Analysis of Corporate and Personal Bankruptcy Law," NBER Working Papers 11536, National Bureau of Economic Research, Inc.
    8. Hudson, John, 1995. "The case against secured lending," International Review of Law and Economics, Elsevier, vol. 15(1), pages 47-63, January.
    9. Michelle White, 2002. "Sovereigns in Distress: Do They Need Bankruptcy?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(1), pages 287-320.

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