Game-Theoretic Bankruptcy Valuation
AbstractThe rules of bankruptcy reorganization in the United States permit a debtor to retain a secured claim’s collateral in exchange for judicially approved compensation even over the objection of the secured creditor. An alternative would grant a secured creditor the right to recover its collateral unless satisfied with the compensation, a right often implicit in modern bankruptcy practice despite the formal rules. Either debtor or secured creditor domination of the bankruptcy process may yield inefficient continuation decisions, violations of absolute priority, and high transactions cost. As a remedy to these pitfalls, a mechanism that would mediate between debtor and creditor control and could harness the parties’ information about collateral value is proposed here: junior interests would, on behalf of the debtor, propose a reorganization plan that could include a take-it-or-leave-it offer for collateral with assured liquidation of the collateral being the consequence if the secured creditor rejected the plan.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by University of Chicago Press in its journal The Journal of Legal Studies.
Volume (Year): 41 (2012)
Issue (Month): 1 ()
Pages: 209 - 238
Contact details of provider:
Web page: http://www.journals.uchicago.edu/JLS/
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).
If references are entirely missing, you can add them using this form.