Free Contracting in Bankruptcy

F. H. Buckley

George Mason University School of Law

March 1997

This Comment argues for free bargaining in bankruptcy reorganizations and the enforcement of waivers of Chapter 11. Bankruptcy opt-outs would permit the parties to adopt risk- sharing strategies denied them by Chapter 11. This would correct a misincentive problem identified by Alan Schwartz, and would do so more effectively than Schwartz claims. More importantly, bankruptcy opt-outs would permit the parties to transfer control of the firm to creditors on default. Governance strategies of this kind police management misbehavior more effectively than the risk-sharing theories proposed by Schwartz and others.

JEL Classification: G33, K12

Not Available For Download

Date posted: June 6, 1997  

Suggested Citation

Buckley, F. H., Free Contracting in Bankruptcy (March 1997). Available at SSRN: http://ssrn.com/abstract=10458

Contact Information

Francis (Frank) H. Buckley (Contact Author)
George Mason University School of Law ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8028 (Phone)
703-993-8088 (Fax)
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