Revenue Efficiency and Change of Control: The Case of Bankruptcy

Rodney L. White Center for Financial Research, Working Paper No. 018-98

Posted: 19 Aug 1998

See all articles by Francesca Cornelli

Francesca Cornelli

London Business School; Centre for Economic Policy Research (CEPR)

Leonardo Felli

University of Cambridge, Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Date Written: August 1998

Abstract

The restructuring of a bankrupt company often entails a change of control. By efficiency of a bankruptcy procedure it is usually meant that the control is allocated into the hands of those who can maximize its value. In this paper we focus instead on how to allocate control with a procedure that allows the creditors to maximize their returns. The conclusion is that creditors should be allowed to retain a fraction of the shares of the company.

Suggested Citation

Cornelli, Francesca and Felli, Leonardo, Revenue Efficiency and Change of Control: The Case of Bankruptcy (August 1998). Rodney L. White Center for Financial Research, Working Paper No. 018-98, Available at SSRN: https://ssrn.com/abstract=112728

Francesca Cornelli

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom
+44 20 7262 5050 x3225 (Phone)
+44 20 7724 3317 (Fax)

HOME PAGE: http://www.lbs.ac.uk/faculty/fcornelli/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Leonardo Felli (Contact Author)

University of Cambridge, Faculty of Economics ( email )

Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom
+44 1223 335221 (Phone)

HOME PAGE: http://www.felli.info

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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