Skip Navigation

This Article
Right arrow Full Text (PDF)
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Similar articles in this journal
Right arrow Similar articles in ISI Web of Science
Right arrow Alert me to new issues of the journal
Right arrow Add to My Personal Archive
Right arrow Download to citation manager
Right arrow Search for citing articles in:
ISI Web of Science (8)
Right arrowRequest Permissions
Google Scholar
Right arrow Articles by Franks, J. R.
Right arrow Articles by Nyborg, K. G.
Right arrow Search for Related Content
Social Bookmarking
Add to CiteULike   Add to Connotea   Add to Del.icio.us  
What's this?

Rev Fin 1996; 9:1165-1210
© 1996 the Society for Financial Studies

Article

Control rights, debt structure, and the loss of private benefits: the case of the UK insolvency code

JR Franks and KG Nyborgz
London Business School, Sussex Place, Regent's Park, London NWI 4SA, UK
z Corresponding author

Abstract

We show how the efficiency of reorganization is affected by the distribution of control rights under the U.K insolvency code. Control rights raise particular problems when creditors have different incentives to keep the firm as a going concern. Such differences may arise from the possession of private benefits by particular creditors which are lost if the debtor firm is liquidated. The incidence of inefficient liquidations is influenced by the size and seniority of creditors' claims. The current U.K. code is widely thought to give rise to inefficient liquidations. We show, however, that inefficiency depends upon the debt structure and whether the controlling creditor in formal bankruptcy has private benefits.


Add to CiteULike CiteULike   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us    What's this?


This article has been cited by other articles:


Home page
 Am Law Econ RevHome page
S. D. Longhofer and S. R. Peters
Protection for Whom? Creditor Conflict and Bankruptcy
Am. Law Econ. Rev., August 1, 2004; 6(2): 249 - 284.
[Abstract] [Full Text] [PDF]


Disclaimer:
Please note that abstracts for content published before 1996 were created through digital scanning and may therefore not exactly replicate the text of the original print issues. All efforts have been made to ensure accuracy, but the Publisher will not be held responsible for any remaining inaccuracies. If you require any further clarification, please contact our Customer Services Department.