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Contractarianism, Contractualism, and the Law of Corporate Insolvency

45 Pages Posted: 17 Dec 2007  

Riz Mokal

South Square Chambers; University College London (UCL) - Faculty of Laws

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What is the appropriate way of theorising about corporate bankruptcy law? That lies, argues this paper, in rejecting Pareto and Kaldor-Hicks efficiency in favour of a particular conception of transaction cost efficiency, and in rejecting the 'contractarian' Creditors' Bargain Model in favour of the 'contractualist' Authentic Consent Model. The paper vindicates these arguments with an analysis of the automatic stay which characterises the collective liquidation regime, of the pari passu principle often said to be at the heart of this regime, and of the liability imposed in some jurisdictions on the managers of terminally distressed companies for failing to take reasonable steps to avoid further loss to their company's creditors.

Suggested Citation

Mokal, Riz, Contractarianism, Contractualism, and the Law of Corporate Insolvency. Singapore Journal of Legal Studies, pp. 51-95, July 2007. Available at SSRN: https://ssrn.com/abstract=1074745

Riz Mokal (Contact Author)

University College London (UCL) - Faculty of Laws ( email )

Gower St
London WC1E OEG, WC1E 6BT
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HOME PAGE: http://www.ucl.ac.uk/laws/

South Square Chambers ( email )

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London, WC1R 5HP
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HOME PAGE: http://www.southsquare.com/Riz_Mokal

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