Protection for Whom? Creditor Conflicts in Bankruptcy
AbstractIn this article we provide a rationale for bankruptcy law that is based on the conflicts among creditors that occur when a debtor's iabilities exceed its assets. In the absence of a bankruptcy law, the private debt-collection remedies that creditors pursue when a debtor is insolvent result in an ad hoc disposal of the debtor's assets, thereby reducing the aggregate value of creditors' claim. We show that coordination clauses can be used by creditors in their loan agreements that will result in coordination, ex post.
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Bibliographic InfoPaper provided by London School of Economics - Centre for Labour Economics in its series Papers with number 9909.
Length: 31 pages
Date of creation: 1999
Date of revision:
Contact details of provider:
Postal: LONDON SCHOOL OF ECONOMICS AND POLITICAL SCIENCE, CENTER FOR LABOUR ECONOMICS, HOUGHTON STREET LONDON WC2A 2AE ENGLAND.
Phone: +44 (020) 7405 7686
Web page: http://www.lse.ac.uk/
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BUSINESS FINANCING ; BANKRUPTCY ; CREDIT;
Find related papers by JEL classification:
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
- K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
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