An Economic Analysis of Transnational Bankruptcies

36 Pages Posted: 12 Jul 2000 Last revised: 10 Apr 2008

See all articles by Lucian A. Bebchuk

Lucian A. Bebchuk

Harvard Law School; National Bureau of Economic Research (NBER)

Andrew T. Guzman

USC Gould School of Law

Multiple version iconThere are 2 versions of this paper

Date Written: March 2000

Abstract

This paper analyzes the effects of the legal rules governing transnational bankruptcies. We compare a regime of territoriality' -- in which assets are adjudicated by the jurisdiction in which they are located at the time of the bankruptcy -- with a regime of universality are adjudicated in a single jurisdiction. Territoriality is shown to generate a distortion in investment patterns that might lead to an inefficient allocation of capital across countries. We also analyze who gains and who loses from territoriality, explain why countries engage in it even though it reduces global welfare, and identify what can be done to achieve universality.

Suggested Citation

Bebchuk, Lucian A. and Guzman, Andrew T., An Economic Analysis of Transnational Bankruptcies (March 2000). NBER Working Paper No. w6521. Available at SSRN: https://ssrn.com/abstract=226260

Lucian A. Bebchuk (Contact Author)

Harvard Law School ( email )

Cambridge, MA 02138
United States
617-495-3138 (Phone)
617-812-0554 (Fax)

HOME PAGE: http://www.law.harvard.edu/faculty/bebchuk/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Andrew T. Guzman

USC Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

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