Citations (5)



Credit Derivatives & the Future of Chapter 11

Stephen J. Lubben

Seton Hall University - School of Law

July 17, 2007

Seton Hall Public Law Research Paper No. 906613
Am. Bankr. L.J., Vol. 84, No. 4, p. 405, 2007

Credit derivatives transfer the default risk of an underlying debt instrument, without transferring legal title. These transactions have several benefits outside of bankruptcy. But once a corporate debtor enters bankruptcy - in particular, chapter 11 - it enters a bargaining process that was bottomed on a model of creditor behavior that may no longer hold because of credit derivatives. A creditor may not act like a traditional creditor if they no longer face the risk of non-payment because that risk has been hedged. In this essay I argue that credit derivatives will substantially alter chapter 11, at least with respect to large corporate debtors.

Number of Pages in PDF File: 27

Keywords: Swaps, Derivatives, Chapter 11, Reorganization, CDS, credit default swaps

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Date posted: June 5, 2006 ; Last revised: March 3, 2010

Suggested Citation

Lubben, Stephen J., Credit Derivatives & the Future of Chapter 11 (July 17, 2007). Seton Hall Public Law Research Paper No. 906613. Available at SSRN: http://ssrn.com/abstract=906613 or http://dx.doi.org/10.2139/ssrn.906613

Contact Information

Stephen J. Lubben (Contact Author)
Seton Hall University - School of Law ( email )
One Newark Center
Newark, NJ 07102-5210
United States
973-642-8857 (Phone)
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