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Free Contracting in Bankruptcy

Posted: 6 Jun 1997  

F. H. Buckley

George Mason University - Antonin Scalia Law School, Faculty

Date Written: March 1997

Abstract

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

Suggested Citation

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

Francis (Frank) H. Buckley (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8028 (Phone)
703-993-8088 (Fax)

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