Abstract

http://ssrn.com/abstract=926086
 


 



Forced to Make Mistakes: Reasons for Complaining about Bebchuk's Scheme and Other Market-Oriented Insolvency Procedures


Alexander Dilger


University of Münster


European Journal of Law and Economics, Vol. 21, No. 1, pp. 79-94, 2006

Abstract:     
Bebchuk's proposal for bankruptcy reform is analysed, in particular his claim that using options is fair and prevents justified complains. However, the proposal has a systematic bias against junior creditors and former shareholders because they have to pay for unavoidable mistakes in estimating the company's value, may lack the financial resources to exercise their options and lose by a day of reckoning. A market solution will be specified that is simpler and at least as fair as Bebchuk's scheme according to his own standards. However, a complete solution to these problems may have to be a non-market one.

Keywords: Absolute priority, Auction, Bankruptcy, Estimate, Insolvency

JEL Classification: G33, K39, K22

Accepted Paper Series





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Date posted: August 23, 2006  

Suggested Citation

Dilger, Alexander, Forced to Make Mistakes: Reasons for Complaining about Bebchuk's Scheme and Other Market-Oriented Insolvency Procedures. European Journal of Law and Economics, Vol. 21, No. 1, pp. 79-94, 2006. Available at SSRN: http://ssrn.com/abstract=926086

Contact Information

Alexander Dilger (Contact Author)
University of Münster ( email )
Institute for Organisational Economics
Scharnhorststr. 100
Münster, D-48151
Germany
+49-251-83-25330 (Phone)
+49-251-83-28429 (Fax)
HOME PAGE: http://www.wiwi.uni-muenster.de/io/en/organisation/Dilger.html
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