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Full-Text Articles in Law
Bankruptcy Law As A Liquidity Provider, Kenneth Ayotte, David Skeel
Bankruptcy Law As A Liquidity Provider, Kenneth Ayotte, David Skeel
Kenneth Ayotte
Since the outset of the recent financial crisis, liquidity problems have been cited as the cause behind the bankruptcies and near bankruptcies of numerous firms, ranging from Bear Stearns and Lehman Brothers in 2008 to Kodak more recently. This paper expands the prevailing normative theory of corporate bankruptcy — the Creditors’ Bargain theory — to include a role for bankruptcy as a provider of liquidity. The Creditors’ Bargain theory argues that bankruptcy law should be limited to solving problems caused by multiple, uncoordinated creditors, but focuses almost exclusively on the problem of creditor runs. We argue that two well-known problems …
Resolving Large, Complex Financial Firms, Thomas Fitzpatrick, Mark Greenlee, James Thomson
Resolving Large, Complex Financial Firms, Thomas Fitzpatrick, Mark Greenlee, James Thomson
James B Thomson
How to best manage the failure of systemically important fi nancial fi rms was the theme of a recent conference at which the latest research on the issue was presented. Here we summarize that research, the discussions that it sparked, and the areas where considerable work remains.
How Well Does Bankruptcy Work When Large Financial Firms Fail? Some Lessons From Lehman Brothers, Thomas Fitzpatrick, James Thomson
How Well Does Bankruptcy Work When Large Financial Firms Fail? Some Lessons From Lehman Brothers, Thomas Fitzpatrick, James Thomson
James B Thomson
There is disagreement about whether large and complex financial institutions should be allowed to use U.S. bankruptcy law to reorganize when they get into financial difficulty. We look at the Lehman example for lessons about whether bankruptcy law might be a better alternative to bailouts or to resolution under the Dodd-Frank Act’s orderly liquidation authority. We find that there is no clear evidence that bankruptcy law is insufficient to handle the resolution of large complex financial firms.