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On the design of efficient priority rules for secured creditors: empirical evidence from a change in law
Finance Department Stockholm School of Economics.
Henry Allen Mark Professor of Law Cornell Law School Myron Taylor Hall Ithaca NY, USA.
Stockholm School of Economics Cornell Law School, Swedish School of Economics and Business Administration Sweden.
2004 (English)In: European Journal of Law and Economics, ISSN 0929-1261, E-ISSN 1572-9990, Vol. 18, no 3, 273-297 p.Article in journal (Refereed) Published
Abstract [en]

This article assesses the effect of a reduction in secured creditor priority on distributions and administrative costs in liquidating bankruptcy cases by reporting the first empirical study of the effect of a priority change. Priority reform had redistributive effects in liquidating bankruptcy. As expected, average payments to general unsecured creditors were significantly higher after the reform than before the reform and payments to secured creditors decreased. Reform did not increase the size of the pie to be distributed in bankruptcy. Nor did it increase the direct costs of bankruptcy.

Place, publisher, year, edition, pages
Springer , 2004. Vol. 18, no 3, 273-297 p.
Keyword [en]
bankruptcy law, secured creditors, priority rules
National Category
Business Administration
URN: urn:nbn:se:umu:diva-5787DOI: 10.1023/B:EJLE.0000049198.54001.58OAI: diva2:145455
Available from: 2007-02-06 Created: 2007-02-06 Last updated: 2011-09-13Bibliographically approved

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Sundgren, Stefan
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