Enterprise Law
Show Less

Enterprise Law

Contracts, Markets, and Laws in the US and Japan

Edited by Zenichi Shishido

Enterprise law represents the entire range of private contracts and public regulations governing the relationship of different capital providers. Enterprise Law comparatively analyses the way these fundamental legal frameworks complement each other in the United States and Japan.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 7: Cramdown versus extinguishing security interests: secured claims in bankruptcy in the United States and Japan

Wataru Tanaka


A challenging legal task in bankruptcy is how to treat different kinds of claims and interests. Claimants with different priorities in a bankrupt firm have different interests, which can cause serious coordination problems. In an ideal Coasean world with no transaction costs, conflicts of interest could be resolved by voluntary negotiations. As long as the going-concern value of a bankrupt firm is greater than its liquidation value, all claimholders would agree to refrain from enforcing their claims and share the going-concern surplus. More often than not, however, negotiation costs and/or information asymmetries prevent efficient transactions from taking place. Carefully designed bankruptcy law can mitigate the coordination problem and help the firm reorganize when it is worthwhile to do so. Designing an efficient bankruptcy system is a difficult task, however, and the law may cause, rather than solve, a problem.

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.

Further information

or login to access all content.