A New Bankruptcy Procedure that Uses Multiple Auctions

European Economic Review, 1997.

Posted: 25 Sep 1997

See all articles by Oliver Hart

Oliver Hart

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Florencio Lopez de Silanes

SKEMA Business School; National Bureau of Economic Research (NBER)

John Moore

University of Edinburgh - Economics; London School of Economics

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Abstract

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

Hart, Oliver D. and Lopez de Silanes, Florencio and Moore, John Hardman, A New Bankruptcy Procedure that Uses Multiple Auctions. European Economic Review, 1997., Available at SSRN: https://ssrn.com/abstract=11380

Oliver D. Hart (Contact Author)

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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Florencio Lopez de Silanes

SKEMA Business School ( email )

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National Bureau of Economic Research (NBER)

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John Hardman Moore

University of Edinburgh - Economics ( email )

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London School of Economics ( email )

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