Better Winding Up: A Proposal for Improved Winding Up of Executory Contracts

Discussion Paper of the Institute for Organisational Economics 4/2015

22 Pages Posted: 4 Mar 2016 Last revised: 8 Apr 2017

Date Written: April 1, 2015

Abstract

An evaluation problem exists when winding up executory contracts in case of insolvency. The trustee has difficulties in accurately considering the claim for damages that arises if he chooses to reject a contract instead of accepting it. An unequal treatment of creditors and inefficiencies follow. However, a simple reform can solve this problem. If an executory contract is accepted by the trustee, there should be the same claim for damages as if it had been rejected. Only the difference between this claim for damages and the initial claim should be paid directly out of the estate.

Keywords: Bankruptcy, Executory Contracts, Insolvency, Winding Up

JEL Classification: G33, K39, K35, K22

Suggested Citation

Dilger, Alexander, Better Winding Up: A Proposal for Improved Winding Up of Executory Contracts (April 1, 2015). Discussion Paper of the Institute for Organisational Economics 4/2015, Available at SSRN: https://ssrn.com/abstract=2741571 or http://dx.doi.org/10.2139/ssrn.2741571

Alexander Dilger (Contact Author)

University of Münster ( email )

Institute for Organisational Economics
Scharnhorststr. 100
Münster, D-48151
Germany
+49-251-83-25330 (Phone)
+49-251-83-28429 (Fax)

HOME PAGE: http://www.wiwi.uni-muenster.de/io/en/organisation/Dilger.html

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