A New Bankruptcy Procedure that Uses Multiple Auctions
European Economic Review, 1997.
Posted: 25 Sep 1997
Whether to reorganize or auction an insolvent debtor corporation is a question at the heart of debate among bankruptcy scholars and practitioners. Proponents of reorganization frequently argue that an auction cannot properly allocate resources where capital markets function poorly. In this paper, we propose a new multiple-auction bankruptcy procedure that would mitigate the problem of weak capital markets. Although any economy could usefully employ this procedure, it is designed to work effectively in developing and transitional economies, where capital markets are not yet well formed.
JEL Classification: G33, G34
Suggested Citation: Suggested Citation