Bankruptcy Costs and the New Bankruptcy Code

Derivatives and the Bankruptcy Code: Why the Special Treatment?

The collapse of Long Term Capital Management (“LTCM”) in Fall 1998 and the Federal Reserve Bank’s subsequent efforts to orchestrate a bailout raise important questions about the structure of the Bankruptcy Code. The Code contains numerous provisions affording special treatment to financial derivatives contracts, the most important of which exempts these contracts from the “automatic stay” and p...

Debt Restructuring Costs and Bankruptcy Risk: Evidence from CDS Spreads

We examine the effects of a recent change to the US tax code that reduced the costs lenders incur when restructuring loans out of court (Regulation TD9599). The regulation contemplated particular types of loans, allowing us to use a triple-differences approach to identify the degree to which borrowers are differentially affected by the shift in restructuring costs. We model these changes and sh...

Bankruptcy Judges and Bankruptcy Venue: Some Thoughts on Delaware

Bankruptcy and Transaction Costs in General Financial Models

General financial models have become workhorse models in the fields of macroeconomics and finance. These models have been developed and extensively studied by general equilibrium theorists. What makes them so applicable for macroeconomics and finance is the well accepted fact that models with a representative agent and without financial frictions yield equilibrium outcomes that are inconsistent...

Supply Chain Contract Design Under Financial Constraints and Bankruptcy Costs

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