当前位置: X-MOL 学术Int. Rev. Law Econ. › 论文详情
Our official English website, www.x-mol.net, welcomes your feedback! (Note: you will need to create a separate account there.)
Could Chapter 11 redeem itself? Wealth and welfare effects of the redemption option
International Review of Law and Economics ( IF 1.216 ) Pub Date : 2021-07-21 , DOI: 10.1016/j.irle.2021.106005
Amira Annabi 1 , Michèle Breton 2 , Pascal François 2
Affiliation  

A redemption option granted to junior creditors has been advocated to accelerate Chapter 11 negotiations and rebalance junior recovery with respect to senior claims. We develop a game-theoretic, continuous-time model of the leveraged firm under Chapter 11 to assess the wealth transfers and welfare impacts of such an amendment to the bankruptcy procedure. After fitting the model to Chapter 11 current outcomes, we show that the redemption option design overcompensates junior creditors, leading to different, but not less frequent, Absolute Priority Rule violations. Since the reform shifts negotiations from a three- to a two-player game, it reduces the scope for concessions in the bargaining process and raises the risk of liquidation. Importantly, the redemption option aligns junior creditors’ interests with those of shareholders, thereby increasing the incentives for risk-shifting prior to bankruptcy.



中文翻译:

第11话能自我救赎吗?赎回选择权的财富和福利影响

已提倡授予初级债权人的赎回选择权,以加快第 11 章谈判并重新平衡与高级债权有关的初级追偿权。我们根据第 11 章开发了杠杆公司的博弈论、连续时间模型,以评估这种破产程序修正案的财富转移和福利影响。在将模型拟合到第 11 章的当前结果后,我们表明赎回期权设计过度补偿了初级债权人,导致违反绝对优先权规则的情况不同,但频率并非较低。由于改革将谈判从三人游戏转变为两人游戏,因此减少了谈判过程中的让步范围,并增加了清算风险。重要的是,赎回选项使初级债权人的利益与股东的利益保持一致,

更新日期:2021-07-29
down
wechat
bug