CREDITOR CONTROL AND CONFLICT IN CHAPTER 11 | Elibrary Perpustakaan Universitas Riau

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CREDITOR CONTROL AND CONFLICT IN CHAPTER 11

Kenneth M. Ayotte - Nama Orang; Edward R. Morrison - Nama Orang;

ABSTRACT
We analyze a sample of large privately and publicly held businesses that filed
Chapter 11 bankruptcy petitions during 2001. We find pervasive creditor control.
In contrast to traditional views of Chapter 11, equity holders and managers exercise
little or no leverage during the reorganization process. 70 percent of CEOs are
replaced in the two years before a bankruptcy filing, and few reorganization plans
(at most 12 percent) deviate from the absolute priority rule to distribute value to
equity holders. Senior lenders exercise significant control through stringent covenants,
such as line-item budgets, in loans extended to firms in bankruptcy. Unsecured
creditors gain leverage through objections and other court motions. We
also find that bargaining between secured and unsecured creditors can distort the
reorganization process. A Chapter 11 case is significantly more likely to result in a
sale if secured lenders are oversecured, consistent with a secured creditor-driven
fire-sale bias. A sale is much less likely when these lenders are undersecured or
when the firm has no secured debt at all. Our results suggest that the advent of
creditor control has not eliminated the fundamental inefficiency of the bankruptcy
process: resource allocation questions (whether to sell or reorganize a firm) are
ultimately confounded with distributional questions (how much each creditor will
receive) due to conflict among creditor classes.

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Judul Seri: Journal of Legal Analysis
No. Panggil: -
Penerbit: Oxford : Oxford University Press on behalf of The John M. Olin Center for Law., 2009
Deskripsi Fisik: Summer, 2009: Volume 1, Number 2 ~ Journal of Legal Analysis
Bahasa: English
ISBN/ISSN: -
Klasifikasi: -
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Tipe Media: -
Tipe Pembawa: -
Edisi: -
Subjek: HUKUM
Info Detail Spesifik: -
Pernyataan Tanggungjawab: agus

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CREDITOR CONTROL AND CONFLICT IN CHAPTER 11

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