Last edited by Voodoom
Friday, July 24, 2020 | History

2 edition of Should derivatives be privileged in bankruptcy? found in the catalog.

Should derivatives be privileged in bankruptcy?

Patrick Bolton

Should derivatives be privileged in bankruptcy?

by Patrick Bolton

  • 69 Want to read
  • 13 Currently reading

Published by National Bureau of Economic Research in Cambridge, MA .
Written in English


Edition Notes

StatementPatrick Bolton, Martin Oehmke
SeriesNBER working paper series -- working paper 17599, Working paper series (National Bureau of Economic Research : Online) -- working paper no. 17599.
ContributionsOehmke, Martin, 1979-, National Bureau of Economic Research
Classifications
LC ClassificationsHB1
The Physical Object
FormatElectronic resource
ID Numbers
Open LibraryOL25180341M
LC Control Number2011657498

  I have written before about my opinions regarding the “safe harbors” in the bankruptcy are the provisions that exempt derivatives and repo contracts from the automatic stay, the prohibition on termination of contracts with the debtor, the prohibition on constructively fraudulent transfers and the prohibition on obtaining preferential treatment on the eve of bankruptcy. Safe Harbors for derivatives contracts under the U.S. Bankruptcy Code have for decades protected the rights of non-debtor counterparties in this vital marketplace. Long thought to be both essential to the proper functioning of derivative markets and bulwarks against systemic risk, the Safe Harbors have more recently become the subject of.

  Read more about When broke, apply for bankruptcy, but process could be excruciating on Business Standard. Though the Insolvency and Bankruptcy Code, came into effect on December 2, , and has rules for individual bankruptcy too, they have not . Should Derivatives Be Privileged in Bankruptcy? (with Patrick Bolton), , Journal of Finance 70(6), [working paper version] [published version] [internet appendix] Maturity Rationing and Collective Short-Termism (with Konstantin Milbradt), , Journal of Financial Economics (3),

Introduction. It is a fundamental tenet of corporate law that creditors, unlike shareholders, may not bring derivative suits on a firm's behalf1-even if the firm is, or is nearly, insolvent.2 Corporate law affords creditors who are unhappy with a corporate debtor's management various remedies, such as the right (in limited circumstances) to put the firm into receivership3 or to sue the.   Bankruptcy scholars have worried about the potential for credit derivatives to frustrate sensible out-of-court reorganizations since such derivatives became widespread in the s. The basic problem they saw was that derivative contracting could complicate dealmaking by disguising investors’ true interests vis-à-vis a distressed company.


Share this book
You might also like
Quantitative Development of Operations Research and Management Science: Volume 3

Quantitative Development of Operations Research and Management Science: Volume 3

The fourth deadly sin

The fourth deadly sin

angel

angel

Computer aided planning and support of intermodal/multimodal transport operations.

Computer aided planning and support of intermodal/multimodal transport operations.

Activities of the National Space Research Centre, 1962 - 1972

Activities of the National Space Research Centre, 1962 - 1972

South Carolina History!

South Carolina History!

Caillou a Special Friend (Caillou

Caillou a Special Friend (Caillou

The Responsible Self

The Responsible Self

Digital integrated circuits.

Digital integrated circuits.

Fresno

Fresno

Images stone: B.C.

Images stone: B.C.

The early maps of Scotland

The early maps of Scotland

Pastoralism

Pastoralism

Automated Deduction, Cade-11

Automated Deduction, Cade-11

Arnold to Auden

Arnold to Auden

Providing for the consideration of H.R. 3843, the Small Business Reauthorization Act of 2000

Providing for the consideration of H.R. 3843, the Small Business Reauthorization Act of 2000

Should derivatives be privileged in bankruptcy? by Patrick Bolton Download PDF EPUB FB2

ABSTRACT Derivatives enjoy special status in bankruptcy: they are exempt from the automatic stay and effectively senior to virtually all other claims.

We propose a corporate finance model to assess the effect of these exemptions on a firm's cost of borrowing and incentives to engage in derivative by: Derivative contracts, swaps, and repos enjoy "super-senior" status in bankruptcy: they are exempt from the automatic stay on debt and collateral collection that applies to virtually all other claims.

Abstract Derivative contracts, swaps, and repos enjoy special status in bankruptcy: they are exempt from the automatic stay and, if collateralized. One interesting aspect is highlighted by Bolton & Oehmke (), who emphasize that derivative counterparties are in a much stronger position than other claimants under U.

Derivative contracts, swaps, and repos enjoy "super-senior" status in bankruptcy: they are exempt from the automatic stay on debt and collateral collection that applies to virtually all other by: Abstract Derivative contracts, swaps, and repos enjoy super-seniorstatus in bankruptcy: they are exempt from the automatic stay on debt and collateral collection that ap.

Second, under the current privileged bankruptcy treatment of derivatives, it may be in the counterpartyís interest to make an ine¢ cient collateral call that pushes the Örm into bankruptcy. If the Örm could impose a stay on collateral demands by derivative counterparties, it would be protected against such ine¢ cient collateral calls (or.

Derivative contracts, swaps, and repos enjoy fisuper-seniorflstatus in bankruptcy: they are exempt from the automatic stay on debt and collateral collection that ap- plies to virtually all other claims.

We propose a simple corporate –nance model to. Second, under the current privileged bankruptcy treatment of derivatives, it may be in the coun- terparty’s interest to make an inecient collateral call that pushes the rm into bankruptcy. Derivatives enjoy special status in bankruptcy: They are exempt from the automatic stay and effectively senior to virtually all other claims.

We propose a corporate finance model to assess the effect of these exemptions on a firm's cost of borrowing and its incentives to engage in efficient derivative transactions. Derivative contracts, swaps, and repos enjoy “super-senior ” status in bankruptcy: they are exempt from the automatic stay and, if collateralized.

Should Derivatives Be Privileged in Bankruptcy. Patrick Bolton and Martin Oehmke. Journal of Finance,vol. 70, issue 6, Abstract: Derivatives enjoy special status in bankruptcy: they are exempt from the automatic stay and effectively senior to virtually all other claims.

We propose a corporate finance model to assess the effect of these exemptions on a. Should Derivatives be Privileged in Bankruptcy.

Patrick Bolton, Martin Oehmke. NBER Working Paper No. Issued in November NBER Program(s):Corporate Finance Derivative contracts, swaps, and repos enjoy "super-senior" status in bankruptcy: they are exempt from the automatic stay on debt and collateral collection that applies to virtually all Cited by: Derivatives enjoy special status in bankruptcy under current U.S.

law. Derivative coun- terparties are exempted from the automatic stay, and through netting, closeout, and collater- alization provisions, they are generally able to immediately collect payment from a defaulted.

Derivative contracts, swaps, and repos enjoy special status in bankruptcy: they are exempt from the automatic stay and, if collateralized, are effectively senior to virtually all other claims.

Derivatives enjoy special status in bankruptcy: they are exempt from the automaticstay and effectively senior to virtually all other claims.

We propose a corporate financemodel to assess the effect of these exemptions on a firm’s cost of borrowing and in-centives to engage in derivative transactions. While derivatives are value-enhancingrisk management tools, seniority for derivatives. Should Derivatives Be Privileged in Bankruptcy.

A net cost of providing hedging services arises endogenously in our frame- work because derivative writers (counterparties) must post costly collateral to back up their promises. Should Derivatives be Privileged in Bankruptcy. By Patrick Bolton Y and Martin Oehmke Z. Cite. BibTex; Full citation; Abstract.

Derivative contracts, swaps, and repos enjoy “super-senior ” status in bankruptcy: they are exempt from the automatic stay and, if collateralized, they are e¤ectively senior to virtually all other claims. Derivatives enjoy special status in bankruptcy: they are exempt from the automatic stay and effectively senior to virtually all other claims.

We propose a corporate finance model to assess the effect of these exemptions on a firm's cost of borrowing and incentives to. Derivatives and the Bankruptcy Code The irony here is that the Bankruptcy Code’s special treatment of derivatives contracts is, according to academics and members of Congress, designed to avoid systemic risk.

A derivative is a financial instrument whose price depends on the value of an underlying asset, such as common stock.3 A. Should Derivatives Be Privileged in Bankruptcy? This book provides a compelling, fact-based assessment of current practices and regulations in.

Bankruptcy law in the United States, which serves as an important precedent for the treatment of derivatives under insolvency law worldwide, gives creditors in derivatives transactions special rights and immunities in the bankruptcy process, including virtually unlimited enforcement rights against the debtor (hereinafter, the “safe harbor”).Potential book topics and book proposals are considered on the basis of the Section’s multi-year publishing plan.

If you would like to publish or edit a Section book, or inquire more information, please contact: Rick Paszkiet, Content Development Manager,[email protected]