Учебный год 2023 / Bhandari_J__Weiss_L_Corporate_Bankruptcy_Economic_and_Legal_Perspectives_1996

bankruptcy codes:

comparison of U.S. and U.K, 450-66 criteria for judging efficiency of, 451-2

adherence to debt contract terms, 451-2 direct costs of insolvency, 452 over-/under-investment, 452 premature and deferred liquidation,

451

other stakeholders' interest, 452 bankruptcy costs, 226-7

for reorganization, 193-7 bankruptcy courts, function of, 329

bankruptcy decision, see corporate bankruptcy decision

bankruptcy discharge policy, 31 bankruptcy framework, assets/liabilities in,

59-60

bankruptcy incentives, and property rules, 54-7 bankruptcy judges, 312-14

binding of nonconsenting parties by, 121 and collectivism, 89-91

management by, 312-13 and valuation, 343, 354

bankruptcy law, 337

and acceleration rights, 52-3 backdrop of other rights, 38 change/reform of, 35

and creditor's coordination problem, 26 development of, 371

history of, 29-30

and maximization of group welfare, 145 principal justification for, 144-5

reform of, 132 role of, 338-9

selective stay model of, 402 virtue of, 340-1

bankruptcy multiplier, notion of, 7 bankruptcy options, drafting a menu of, 399 bankruptcy policy, 30, 73-94

traditional view of, 96-100 bankruptcy proceedings:

acceleration of loan obligations, 62 as day of reckoning, 336

identification of nonbankruptcy rights, 61 liquidating liabilities, process of, 63-4 nominal valuation of rights, 61-3 normative role of, 58-60

participants in, 60-7 purpose of, 341-2

relative valuation of rights, 64-7

Index

unmanifested tort injuries, 62-3 and valuation, 348-9

and waiver of procedural rights, 348 bankruptcy process:

primary objective of, 143 standardization of, 439

strategic manipulation problems, 163-5 screening costs, 164-5

uncertainty costs, 163-4 bankruptcy reallocation:

contractual risk sharing, 203-5 illusory benefits of, 201-5 limited benefits, 202-3

firm-specific risk, 202 interdependent risk, 202-3

proceeds reallocation, 205 bankruptcy reallocation costs, 192-201

compulsory contract term inefficiencies, 200-1

in avoidance of bankruptcy, 201

in expectation of bankruptcy, 200-1 forum shopping costs, 197

perverse investment incentives, 197-9 diligence incentives, 199

risk incentives, 197-9 reorganization costs, 193-7

attribution to bankruptcy reallocation, 194-7

direct and indirect costs, 193-4 Bankruptcy Reform Act (1978), 424-5 bankruptcy resolution, 260-78

direct costs of bankruptcy, 262-6 indirect costs of bankruptcy, 263-5 sample of bankrupt firms, 261-3 summary of claims resolutions, 266

bankruptcy sharing, 147-54

and common disaster model, 147-54 and diversification of common risks,

149-50

eve-of-bankruptcy conflicts of interest, 150-1

implementation costs of, 162-5 insolvency risks, reducing, 148-9 nonconsensual distributional effects, 153-4 valuation dilemma, 151-3

see also bankruptcy; bankruptcy process bankruptcy system, flaws in, 329-30 bargaining in bankruptcy, 354-5 bargaining deadlocks, 127, 355-6 Bebchuk, Lucian Arye, 370

best-interests-of-creditors-test, 502-3, 516 compliance with, 516-18

bondholders: protecting, 428-9

recapitalization by, 423 bond workouts, 415-33 exit consents, 420-1

holdouts and the buoying-up effect, 416-17 reasons for holdouts and bargaining

failures, 417-18

regulation and need for near unanimity, 418

mixed incentives, 421-2

reducing the buoying-up effects, 419-22 and thin residual market, 421

and Trust Indenture Act, 418, 420, 422-9 buoying-up effect:

and holdouts, 416-18 reducing, 419-22 and seniority, 420

Burner v. United States, 36, 40n, 97n bylaw provisions, 442

cancellation of indebtedness (COD), 325-6 capital retention, 438

case administration, 505-6

Case v. Los Angeles Lumber Products, 113-14, 424

Center for Research in Security Prices (CRSP), 261

Chameleon Equity, 435-44 agency costs, 438-9 capital retention, 438

inhospitable legal environment, 439-44 commercial and corporate law

limitations, 441-3 corporate income tax, 440-2

nonconsensual claimants, 443-4 waiver of bankruptcy, 439-40

secured finance, 437 subsequent capital, 437-8 tiered structure, 436-7

chapter 7, 31,350

versus chapter 11 reorganization, 399-404 chapter 11 reorganization, 157-62, 217-26,

370

abolishment of, and Japan, 501-30 absolute priority and contribution, 160-1 advantages of, 315-16, 459

benefits to stakeholders, 463

INDEX

case for, 157-9 chapter 7 vs., 399-404

common disaster explanations for, 161-2 costs of, 460-1

delays/distractions caused by, 313 distributional effects of, 159-60 see also reorganization

charter provisions, 442

Chicago Board of Trade v. Johnson, 68-71 claim, defined, 89

closely held corporations, common justification for reorganization of, 345

collection system, and default, 76-7 collective proceeding, 45 collectivism, 86-92

and bankruptcy judges, 89-91 and state law, 91-2

common disaster model, 143-54 applying, 154-7

chapter 11 reorganization, 157-62 implementation costs for bankruptcy

sharing, 162-5

reimbursement for delay costs, 154-7 bankruptcy sharing and, 147-54

common risks of business failure, 147 Companies Court, 455

compulsory contract term inefficiencies, 200-1 in avoidance of bankruptcy, 201

in expectation of bankruptcy, 200-1 Compustat, Research File, 261

conflicts of interest, eve-of-bankruptcy, 150-1 contingent equity structure, 406-7

contract enforcement, and default, 74-6 contractual arrangements, long-term, com-

plexity of, 46-57 contractual risk sharing, 203-5 control hypothesis, 12-13 corporate bankruptcy:

attorneys as beneficiaries of, 445 efficiency of, 408-14 financial/political theories of, 434-47

Chameleon Equity, 435-44 common pool problem, 434-5

inhospitable legal environment, 439-44 functions of, 408

managers as beneficiaries of, 446 politicians as beneficiaries of, 446-7 public choice, 444-7

concentrated benefits, 445-7

diffuse costs/diversified investment, 444-5

corporate bankruptcy decision, 207-30 bankruptcy costs, 226-7 liquidation, 208-17

characteristics of liquidating firms, 211 economic efficiency considerations, 211-17 U.S. law of bankruptcy liquidation, 208-10

reorganization:

characteristics of reorganizing firms, 219-20

economic efficiency considerations, 220-3 proposed reforms of procedure, 227-30 subsidies, 223-5

U.S. law of bankruptcy reorganization, 217-19

corporate debtors, rehabilitation of, 31-5 corporate leverage, see leverage

corporate reorganization, see reorganization corporation, definition of, 32

costs:

of default, ability to bear, 82 forum shopping, 102, 197 of going-concern sales, 343 of reorganization, 193-7

of risk sharing, 149 screening, 164-5 uncertainty, 163-4

costs of bankruptcy, 479-91 costs of financing distress:

and leverage, 5-6 private vs. social, 6-8

Court of Chancery, 453, 455 cram-downs, 241-2, 268, 330 levels of/contests of, 236-7

creditors, 31-3 fixed charge, 473

floating charge, 473 homogeneous pool of, 42 pool of, changes in, 44 self-protection, 416 shareholders compared to, 25 similarities among, 83

treatment of, in bankruptcy, 395

and withdrawal rights, argument for, 341 creditor's bargain:

bankruptcy as, 25-108 bankruptcy sharing, 147-54 defined, 145-6

expanded model of, 143-54 and property claimants, 44-6 reconstructing, 143-7

Index

background assumptions, 143-5 distributional effects, 146-7

and unsecured creditors, 40-4 creditor's coordination problem, consequences of, 26

CRSP, see Center for Research in Security Prices (CRSP)

cushion of free assets, 20 Cutler, David, 111,270

de-acceleration, 47

reorganization de-acceleration option, 48-50 deadlocks, bargaining, 355-6

debt:

control function of, 13

and information asymmetry, 18

and motivation of organizational efficiency, 12-13

debt creation, 12 debtor-in-possession, defined, 244n debtor's choice, 395-407 debtors-in-possession, 471

default:

ability to bear costs of, 82 and bankruptcy, 79-81

and collection system, 76-7 and contract enforcement, 74-6 managing, 308-21

advantages of chapter 11 reorganizations, 315-16

costs of workouts vs. chapter 11, 310-14 holdout problem, 316-17

incentives of manager/directors, 317-19 policy implications, 319-21

and shareholders, 314-15 workouts in the 1980s, 309-10

and state collection law, 77-9 see also bankruptcy

default contract rules, 397-9 deferred liquidation, 451

delay in filing for bankruptcy, 470 diligence incentives, 199

direct costs:

of bankruptcy, 262-6 measures for, 264

and relationship to firm size, 265 bankruptcy reallocation, 193-4

of exchange offers for troubled junk bonds, 313-14

and violation of priority of claims, 260-78

discharge-of-indebtedness income, 366 distribution:

assets available for, 67-72 compromises in, 146-7

and nonbankruptcy priority rules, 100-1 distributional effects, 146-7, 154-65

time-value problem, 154-6 nonreimbursement as risk-sharing

insurance, 156-7

distributive rationale in bankruptcy, 81-4 diverse owners, bargaining between purchaser

and, 347-8

diversification of common risks, 149-50 diversification programs, and free cash flow

theory, 14

division problem in reorganization, 372-5 equity holders, 379-80

example of, 375-6 exercise of rights, 380-1 extensions, 391-4

concentration of claims in one hand, 393-4

contracts with favorable terms, 392-3 more than three classes, 391-2 secured claims, 393

junior creditors, 379

new reorganization regime, 389-90 and participant entitlements, 377-8

consistency with, 381-8 differing estimates, 385-7 market pricing, 382-3

participants' information/financial resources, 387-8

proposed method, 375-81 senior creditors, 379

and size of distribution, 376-7 underlying idea of proposed method,

378-80

Donovan v. TMC Industries, 66

Easterbrook, Frank H., 327, 408, 440 Eisenberg, Theodore, 449, 501

Elliott v. Bumb, 47n

English bankruptcy statutes, 29

equitable sharing vs. absolute priority, 253-5 equity:

frozen out of distribution, 247-9 share of distribution, 240-7

determining, 249-51 equityholders, 31, 379-80

INDEX

ERISA (Employee Retirement Income Security Act of 1974), 105-6

eve-of-bankruptcy conflicts of interest, 150-1 excess going-concern value, 313

executory contractholders vs. lenders, 47-52 executory contracts, 70-2

exercise of rights, 380-1 exit consents, 420-1 extensions, 391-4

concentration of claims in one hand, 393-4 contracts with favorable terms, 392-3 more than three classes, 391-2

secured claims, 393

financial/political theories of bankruptcy, 434-7

Chameleon Equity, 435-44 common pool problem, 434-5

inhospitable legal environment, 439-44 firm-specific capital investments, problem of,

151-3 firm-specific risk, 202

first-mover disadvantages, 367 fixed charge creditors, 473 floating charge creditors, 473 forum shopping, 101-4

costs of, 102, 197 priority rules and, 102-4

France:

liquidation procedure, 473

new loans and postpetition priority, 478 and saving of failing firms, 475-6 Franks, Julian, 449, 450

free cash flow, definition of, 11-14

free cash flow theory of takeovers, 14-16 free-riders, 355-6, 470

fungible duties, 54

game theory, 355-6, 403

Germany, bankruptcy reorganizations, 476-7 Gilson, Stuart C, 308

going-concern sales, cost of, 343 going-concern value, 144

excess, 313 Great Britain:

administration order, 476 liquidation procedure, 473 see also U.K. bankruptcy code

highly leverage transactions (HLTs), 9n historical nonnegotiability, 366

holdout problem, 316-17, 413 defined, 324

and pre-packaged bankruptcy, 323-4 homogeneous pool of creditors, 42 Hoshi, Takeo, 449, 533

implementation costs, bankruptcy sharing, 162-5 increased aggregate pool of assets, 42-3, 45 indirect costs:

of bankruptcy, 263-5 bankruptcy reallocation, 193-4

inhospitable legal environment, 439-44 commercial and corporate law limitations,

441-3

corporate income tax, 440-2 nonconsensual claimants, 443-4 waiver of bankruptcy, 439-40

initiation of bankruptcy, 469

In re Amatex Corp., 63n

In re Equity Funding Corp. of Am., 358-60 In re Gladding Corp., 63n

In re Johns-Manville Corp., 63n In re Landau Boat Co., 162

In re Los Angeles Lumber Products, 308-21, 424-5

In re Silverman, 49n

In re Swift Aire Lines, Inc., 69-70 In re Teleman Enterprises, 40n insider control, 426

insolvency:

direct costs of, 452

risks, strategies for reducing, 148-9 Insolvency Act (1986-U.K.), 457 insolvent debtors:

and absolute priority rule (APR), 238-9 terms of settlement, 238-51

institutional intermediary, rise of, 425-6 interdependent risk, 202-3 intermediaries, 427-8

in-the-money claims, 334 investors:

junior vs. senior, interests of, 339 rights of, differences in, 338

and withdrawal rights, 341

Jackson, Thomas H., 27, 39, 58, 109-10, 113, 141

Japanese business reorganization proceedings, 504-6

and abolishment of chapter, 11, 501-30

Index

and best-interest test, compliance with, 516-18

case administration, 505-6 commencement of the case, 505

composition plan and debtor characteristics, 509

composition proceedings, 504-6 confirmation of plan/postconfirmation

matters, 506 confirmation vs. denial, 520-2

creditors, returns to, in confirmed cases, 522-4

creditors/claims/plan acceptances, 510 data and questions studied, 506-12 filing the petition, 504-5

implications for U.S. reorganizations, 526-9 liquidation value, estimates of, 512-14

net gains/losses to creditors from compositions, 522-3

problems with compositions, 506 proposed repayment percentage, 514-16 research questions addressed, 511 summary statistics, 507-8

withdrawal vs. litigation, 518-20 withdrawn and denied cases, 524-5

Japanese financial distress, 531-49 and corporate finance, 533-7 data on, 537-40

empirical findings, 540-6

Jensen, Michael C, 1-2, 11, 327, 329 judicial valuation uncertainties, 354 junior creditors, 379

junior investors, interest of, 339 junk bonds, 3-5,415,430-2

and the S&L crisis, 8-10

Kashyap, Anil, 449, 531

Keiretsu, 532-3

Keiretsu no Kenkyu, 539

large firms in bankruptcy, 303-5 "Law and Language of Corporate

Reorganizations, The" (Blum), 113 Lenders vs. executory contractholders, 47-52 leverage, 3-10

and costs of financing distress, 5-6 increase, cost of, 13

junk bonds, 3-5 private/social costs of, 3-8 self-correcting, 8-10

liabilities, 59-67

liquidating, process of, 63-4 nonbankruptcy rights, identification of, 61 unmanifested tort injuries, 62-3

limited ownership, 68-70 liquidation, 52-7, 208-17

British procedure for, 473 characteristics of liquidating firms, 211 deferred, 451

economic efficiency considerations, 211-17 French procedure for, 473

of liabilities, process of, 63-4 premature, 451

proceedings, 55-6

U.S. law of bankruptcy liquidation, 208-10 liquidator:

U.K. bankruptcy code, 453 receiver vs., 455

loan priorities, theory of, 17-24

long-term contractual arrangements, 46-57 lenders vs. executory contractholders, 47-52 liquidation/reorganization, 52-7

LoPucki, Lynn, 111,232

M&M proposition, 4-6 McConnell, John, 322

managers, as beneficiaries of bankruptcies, 445

managing default, 308-21

chapter 11 reorganizations, advantages of, 315-16

costs of workouts vs. chapter 11, 310-14 legal and professional fees, 310-12 lost investment opportunities, 313-14 management by bankruptcy judges,

312-14

holdout problem, 316-17 manager/directors, incentives of, 317-19 policy implications, 319-21

and shareholders, 314-15 workouts in the 1980s, 309-10

mandatory contract rules, 397

menu of bankruptcy options, drafting, requirements for, 399

Midlantic National Bank v. NJ. Department of Environmental Protection, 36-8

Miller, Merton H., 1,3

mixed incentives, bond workouts, 421-2 monitoring impediments, to judicial doctrine,

359

INDEX

negative pledge clause, 17

net operating loss carryovers (NOLs), 245, 325 new bankruptcy code, priority of claims

under, 267-75

new debt, and value of initial debt, 19 new reorganization paradigm:

efficient markets, data, 357 judicial doctrine, 358-60

informational impediments, 358-9 monitoring impediments, 359 resolution as to basic impediments, 360 uncertainty and institutional

considerations, 359-60 uncertain market efficiency, 360-4

control blocks, 361

disparate enterprise valuation, 362 manipulation of valuation sale terms,

362-3

strategic bidding, 363 strategic delay, 362-3 no-bankruptcy option, 399

nominal valuation of rights, 61-3 nonbankruptcy law, 38, 71 nonbankruptcy rights, identification of, 61

nonconsensual distributional effects, 153-4 nonfungible duties, 54

nonpayment of debt, see default

Northern Pacific Railway v. Boyd, 117-20 costs of implementing Boyd, 136-9 lesson of, 117-18

Norwest Bank Worthington v. Ahlers, 119, 164

optimal contract, 18-24 borrower's problem, 18-19 initial lender's problem, 19-24

organizational efficiency, role of debt in motivating, 12-13

out-of-the-money claims, 334

participant entitlements, 377-8 consistency with, 381-8 differing estimates, 385-7 market pricing, 382-3

participants' information/financial resources, 387-8

Pension Benefit Guaranty Corporation, 478 personal service contracts, 54

perverse investment incentives, 197-9 diligence incentives, 199

risk incentives, 197-9

Picker, Randal C, 110, 168

politicians, as beneficiaries of bankruptcies, 445-6

pool of creditors: changes in, 44 homogeneous, 42

postreorganization market, 353, 360 prebankruptcy transactions, incentive effects

on, 82-3

prebankruptcy wage claims, 66-7 premature liquidation, 451 pre-packaged bankruptcy:

benefits of, 323-6

integrity of creditors' claims, 324-5 solving of holdout problem, 323-4 tax benefits, 325-6

economics of, 322-8 future of, 326

pre-packaged bankruptcy petition, 459 prepetition creditors, and reorganization, 344-5 priority of claims:

under new bankruptcy code, 267-75 deviations from strict priority of claims,

270-2 method, 269-70

violation of, 260-79 priority principles, 17

prisoner's dilemma analogy, 41-2 proceeds reallocation, 205

prodebtor bias in Bankruptcy Code, 330 project returns, 18

property claimants, and creditor's bargain, 44-6 Protective Committee Report, SEC, 423 purchase-money priority, 18

put options, 9

Quanta Resources, 36-8 quasi-insider control, 427

Rasmussen, Robert K., 327, 395 real vs. hypothetical prices, 409-10 reasonable levels of debt, 353-4

"reasonableness" standard, reorganization doctrine, 353-4

recapitalization by bondholders, 423 receivership, U.K. bankruptcy code, 453-5 rehabilitation, 104-6

rehabilitation of corporate debtors, 31-5 rejection in bankruptcy, 366

relative valuation of rights, 64-7

Index

contractual specific performance, 64-6 prebankruptcy wage claims, 66-7

renegotiation and arbitration, two-party cases, 120-8

reorganization, 52-7, 157-62, 217-26, 232-59, 336-50

absolute priority and contribution, 160-1 as alternative to liquidation, 370

case for, 157-9

case outcomes, 234-9 characteristics of reorganizing firms,

219-20

common disaster explanations for, 161-2 common justification for, 345 distributional effects of, 159-60 division problem in, 372-5

equity holders, 379-80 example of, 375-6 exercise of rights, 380-1 junior creditors, 379

and participant entitlements, 377-8 proposed method, 375-81

senior creditors, 379

and size of distribution, 376-7 underlying idea of proposed method,

378-80

economic efficiency considerations, 220-3 mechanisms of, 351-2

methodology, 232-4

new paradigm for, 356-64

and prepetition creditors, 344-5 proceedings, 53-5

proposed reforms of procedure, 227-30 settlement:

frequency of, 234-9 terms of, 239-51

subsidies, 223-5

U.S. law of bankuptcy reorganization, 217-19

see also chapter 11 reorganization; division problem in reorganization; reorganization costs

reorganization costs, 193-7

attribution to bankruptcy reallocation, 194-7

direct and indirect costs, 193-4 reorganization payments, and Bankruptcy

Code, 49

Republic Health Corp., prepackage reorganization plan, 324-6

residual claimants: and auctions, 412

and going-concern sales, 343-4 resolution, bankruptcy, 260-78

rights of investors, differences in, 338 risk allocation, and bankruptcy, 190-206 risk control, 148-9

risk incentives, 197-9 risk sharing, 148-9, 190-2

anticipated costs of, 149

bankruptcy reallocation costs, 192-201 as a means of diversifying common risks,

149-50 risk transfer, 148-9

Roe, Mark J., 181, 327, 351, 415, 451

Scharfstein, David, 449, 533

Scheme of Arrangements, 457

schemes of arrangement, U.K. bankruptcy code, 456-7

Schwartz, Alan, 2, 17

Scott, Robert E., 109-10,141 screening costs, 164-5 secured claims, 393

secured creditors, 31, 106-7, 474 and valuation, 364

secured loans, 22

Securities and Exchange Commission (SEC): annual report, 261

corporate reorganization study, 422 Protective Committee Report, 423

securities regulation, 367 selective stay model, 402, 407

self-correcting tendencies in leveraging, 8-10

self-protection, creditors, 416

senior creditors, and division problem in reorganization, 379

senior investors:

and bankruptcy as opt-out right, 340 interests of, 339

Servaes, Henri, 322 settlement:

terms of, 239-51 insolvent debtors, 238 solvent debtors, 251-5

slice-of-common stock sale, 368 small firms in bankruptcy, 298-303 Smith, Clifford, 13

Smith v. Wrehe, 56n

INDEX

solvent debtors:

terms of settlement, 251-5

equitable sharing vs. absolute priority, 253-5

standardization of bankruptcy process, 439 state collection law:

bankruptcy law compared to, 78-9 and collectivism, 91-2

and default, 77-9

state law, and collectivism, 91-2 strategic costs, reduction of, 41-2 strategic manipulation problems, 163-5

screening costs, 164-5 uncertainty costs, 163-4

strict priority, failing to enforce, 332-3 subsidies, to reorganizing firms, 223-5 Summers, Lawrence H., Ill, 279 survey evidence, 298-306

absolute priority rule (APR), deviations from, 305-6

large firms in bankruptcy, 303-5 small firms in bankruptcy, 298-303

swapping equity for debt, 8n

Tagashira, Shoichi, 449, 501

takeovers, free cash flow theory of, 14-16 tax frictions, 430-1

Texaco-Pennzoil litigation, 279-97 conflict, 280-1

effects on other claimants, 288-91 effects on shareholder wealth, 282-8

market response, 282-8 methodology, 282

implications of, 295-6 value fluctuations, 292-4

third-party buyers, and valuation of firms, 342-3

timing of bankruptcy, 469-70 Torous, Walter, 449, 450 trustees, 471

Trust Indenture Act, 415, 418, 420-9, 458 and bond workouts, 418, 420, 422-9 prohibition of majority action clauses by,

422-9

and insiders/quasi-insiders, 423 repeal of, 429-32

two-party cases: bargaining impasses, 127 default rights, 128

freeze-out problem, 128-36

junior owner's ability to bargain, source of, 120

renegotiation and arbitration, 120-8 residual ownership, 128-36

collusion and valuation, 130-2 negotiations and, 133-6 recapitalization triggered by insolvency,

135

rights on default, 125

see also Northern Pacific Railway v. Boyd

U.K. bankruptcy code, 452-6 administrator, 455-6

receiver vs., 456

code of receivership, 461-2 liquidator, 453

receiver vs., 455 receivership, 453-5

workouts/schemes of arrangement, 456-7 unanimous consent procedure (UCP), 217-19 uncertain market efficiency, 360-4

control blocks, 361

disparate enterprise valuation, 362 manipulation of valuation sale terms, 362-3 strategic bidding, 363

strategic delay, 362-3 uncertainty costs, 163-4

United States Savings Association of Texas v. Timbers oflnwood Forest Associates,

155, 164, 268 unmanifested tort injuries, 62-3 unsecured creditors, 40-5, 56

common-law rule, 56

and creditor's bargain, 40-4 U.S. bankruptcy code, 457-9

brief history of, 457 chapter 11 procedure, 457-8

compared to U.K. code, 459-61 cost of system, 460-1 efficiency, 461-4

liquidation vs. going concern value, 45960

management control, 459 workouts vs. chapter 11, 458-9

see also Bankruptcy Code; chapter 11 reorganizations; reorganizations

U.S.-European bankruptcy comparisons, 467500

Index

bankruptcy under alternate bankruptcy policies, 491-7

chapter 7/chapter 11, 494-5 liquidation only, 492-3

new European bankruptcy policy, 493-4 corporate bankruptcy law, 468-79

initiation of bankruptcy, 469 liquidation procedure, 472-3 management of firm in bankruptcy, 471 provisions facilitating reorganization,

477-9 reorganization/liquidation decision,

471-2

reorganization plan, 474-7 timing of bankruptcy, 469-70

treatment of secured creditors, 474 costs of bankruptcy, 479-91

costs of type-I error, 489 costs of type-II error, 489-90 delay effect, 485-7

direct costs, 490-1 ex ante costs, 479-83

overinvestment effect, 483-5 total costs of bankruptcy, 491 underinvestment effect, 483-5

valuation, 151-3, 354-5

and bankruptcy judges, 343, 354 and bankruptcy proceedings, 348-9 judicial, 354

market vs. hypothetical, 410 protocols, 233-4

valuation of assets, 342 valuation dilemma, 151-3 valuation protocols, 233-4

violation of priority of claims, 260-78

waiver of procedural rights, 348

Wall Street Journal Index (WSJI), 261 Warren, Elizabeth, 28, 73

Weiss, Lawrence A., Ill, 260

White, Michelle, 110-12, 207, 298, 449, 467

Whitford, William C, 111, 232 withdrawal rights, and creditors, 341 workouts, 429

collapse of, 416-22 debtors in, 322

U.K. bankruptcy code, 456-7