Transactions with creditors - Ownership regimes and creditor protection
3 important questions on Transactions with creditors - Ownership regimes and creditor protection
How are the variations in framework characterised?
- According to the extent to which they facilitate or restrict creditor enforcement against a financially distressed debtor
- Concentrated debt claims lower creditor coordination costs
- Banks influence politics. Interest groups vary with the nature of the financial system
Who contracts with creditors out of the jurisdictions?
- Debt finance: from banks (concentrated debt)
US: market-oriented disclosure requirements and no capital constraints
- Banking concentrations is restricted and share ownership is dispersed
What is the role of bankruptcy laws in different jurisdictions?
- Greater bank power, no judicial involvement
- Tough bankruptcy proceedings
- Compliance ex ante from recalcitrant debtors
- Creditors unwilling to negotiate ex post
France: state involvement, bankruptcy proceedings more frequent.
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