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Contractarianism, Contractualism, and the Law of Corporate Insolvency

Riz Mokal

University College London (UCL) - Faculty of Laws; South Square Chambers

November 2006

A version of this paper appears in [2007] Singapore Journal of Legal Studies (July).

What is the appropriate way of theorising about corporate bankruptcy law? That lies, argues this paper, in rejecting Pareto and Kaldor-Hicks efficiency in favour of a particular conception of transaction cost efficiency, and in rejecting the 'contractarian' Creditors' Bargain Model in favour of the 'contractualist' Authentic Consent Model. The paper vindicates these arguments with an analysis of the automatic stay which characterises the collective liquidation regime, of the pari passu principle often said to be at the heart of this regime, and of the liability imposed in some jurisdictions on the managers of terminally distressed companies for failing to take reasonable steps to avoid further loss to their company's creditors.

Number of Pages in PDF File: 48

Keywords: Anthony Duggan, Thomas Jackson, Douglas Baird

JEL Classification: K10, K22

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Date posted: November 22, 2006  

Suggested Citation

Mokal, Riz, Contractarianism, Contractualism, and the Law of Corporate Insolvency (November 2006). Available at SSRN: https://ssrn.com/abstract=946403 or http://dx.doi.org/10.2139/ssrn.946403

Contact Information

Riz Mokal (Contact Author)
University College London (UCL) - Faculty of Laws ( email )
Gower St
London WC1E OEG, WC1E 6BT
United Kingdom
+44 - (0)20 - 7679 1406 (Phone)
+44 - (0)20 - 7679 1461 (Fax)
HOME PAGE: http://www.ucl.ac.uk/laws/
South Square Chambers ( email )
3/4 South Square
Gray's Inn
London, WC1R 5HP
United Kingdom
HOME PAGE: http://www.southsquare.com/
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