Claimholder incentive conflicts in reorganization: the role of bankruptcy law |
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Authors: | Brown DT |
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Institution: | Graduate School of Business Administration, University of Florida, Gainesville, FL 32611, USA |
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Abstract: | When a firm is in financial distress, in most cases a set ofmutually advantageous reorganization plans exist. This articleshows that the bankruptcy code, by providing rules governingthe negotiation process, yields a unique solution to the reorganizationprocess. In addition, the structure imposed by the code mitigatesthe holdout problem created by the individual claimant's divergentincentives. |
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