Contracts, Markets, and Laws in the US and Japan
Edited by Zenichi Shishido
Two themes dominate traditional accounts of Chapter 11 bankruptcy reorganization in the United States. First, managers or equity holders, or both, control the reorganization process. This is made possible by debtor-friendly features of the US Bankruptcy Code and judges who are passive or biased in favor of continuation. Exploiting the court’s protection, managers can entrench themselves and equity holders can extract concessions from creditors in the form of deviations from absolute priority. As a result, courts may permit reorganizations of firms that should liquidate. The second theme, usually implicit in the literature, is that creditors act as a unified constituency, usually in agitating for a quick liquidation. Together, these traditional themes continue to influence the academic literature in many areas related to financial distress.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.