Speed Bankruptcy: A Firewall to Future Crises

14 Pages Posted: 4 Oct 2010

See all articles by Garett Jones

Garett Jones

George Mason University - Department of Economics; George Mason University - Mercatus Center


While many prominent economists have proposed such conversions, the practical details have received little attention. The author addresses key legal concerns, the political viability of such conversions, and how they fit in with other proposals such as contingent convertibles and funeral planning.During the 2008 financial crisis, the U.S. government purchased large equity stakes in major financial institutions. The author argues that another source of equity was available : the long-term bonds issued by these same banks. Overnight debt-to-equity conversions, or what the author refers to as “speed bankruptcy,” could have helped restore these firms to health, while at the same time ending the implicit government guarantee of big-bank debt.

Suggested Citation

Jones, Garett, Speed Bankruptcy: A Firewall to Future Crises. Journal of Applied Corporate Finance, Vol. 22, Issue 3, pp. 73-84, Summer 2010, Available at SSRN: https://ssrn.com/abstract=1684898 or http://dx.doi.org/10.1111/j.1745-6622.2010.00292.x

Garett Jones (Contact Author)

George Mason University - Department of Economics ( email )

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Fairfax, VA 22030
United States

HOME PAGE: http://economics.gmu.edu/people/gjonesb

George Mason University - Mercatus Center ( email )

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