Different Approaches to Bankruptcy

By Oliver Hart. 2000

241 citations recorded by the source corpus.

In the last fifteen years or so, lawyers working in law and economics and economists with an interest in legal matters have turned their attention to the topic of bankruptcy. A large amount of work has resulted, both theoretical and empirical, some of which has been concerned with the functioning of existing bankruptcy procedures and some with bankruptcy reform. Although researchers in this area have expressed different views, I believe that one can identify a consensus on certain issues, e.g., the goals of bankruptcy and some of the characteristics of an efficient bankruptcy procedure. This paper summarizes this consensus. One point I will stress is that it is unlikely that one size fits all.' That is, although some bankruptcy procedures can probably be rejected as being manifestly bad, there is a class of procedures that satisfy the main criteria of efficiency. Which procedure a country chooses or should choose may then depend on other factors, e.g., the country's institutional structure and legal tradition. One can also imagine a country choosing a menu of procedures and allowing firms to select among them.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/5cb76c33dcc3929c6a4d20b30477e58b534af796

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Citations in the corpus

Openness can be good for Growth: The Role of Policy Complementarities (2005, background): “Some papers point to strongly positive growth effects of trade openness.3 Others point to small positive effects.4 But others, most notably Harrison (1996) and Rodriguez and”
Investor Protection and Corporate Governance (2000, background): “3 Research by Grossman, Hart, and Moore, summarized in Hart (1995), makes a further key advance by focusing squarely on investor power vis a vis the insiders, and distinguishing between the contractual and residual control rights that investors have.”
Do Bankruptcy Codes Matter? A Study of Defaults in France, Germany, and the U.K. (2008, unknown): “In the UK, the concentration of control rights in the hands of the most senior creditor may result in more piecemeal liquidations, as predicted by Hart (2000) and Acharya, Sundaram, and John (2004).”
Corporate Performance in the East Asian Financial Crisis (2000, background): “Hart (1999) highlights the importance of the institutional framework in preventing and resolving systemic financial distress and discusses the possible need for extraordinary mechanisms during periods of systemic crisis.”
Control benefits and CEO discipline in automatic bankruptcy auctions (2003, unknown): “The hard constraint on management in this automatic auction system has caused several authors, including Aghion et al. (1992), White (1996), and Hart (2000), to warn of excessive risk shifting prior to filing.”