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Should we redistribute in insolvency

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  • John Armour

Abstract

The characterisation of a security interest as 'fixed' or 'floating' has generated much litigation in English courts. This is because a floating charge is subordinated by statute to other claims in the debtor's insolvency, whereas a fixed charge is not. This paper uses the example of the floating charge to argue that such statutory redistribution between claimants in corporate insolvency is generally undesirable.

Suggested Citation

  • John Armour, 2006. "Should we redistribute in insolvency," Working Papers wp319, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp319
    Note: PRO-2
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    File URL: https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp319.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. John Armour, 2008. "The Law and Economics Debate about Secured Lending: Lessons for European LawMaking?," Working Papers wp362, Centre for Business Research, University of Cambridge.
    2. John Armour & Audrey Hsu & Adrian Walters, 2006. "The costs and benefits of secured creditor control in bankruptcy: Evidence from the UK," Working Papers wp332, Centre for Business Research, University of Cambridge.

    More about this item

    Keywords

    corporate insolvency; law and finance; history of floating charge; bankruptcy priorities; secured credit.;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • N43 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: Pre-1913

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