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Title: Game Theoretic Analysis of Negotiations under Bankruptcy
Authors: Annabi, Amira
Breton, Michèle
François, Pascal
Keywords: Bankruptcy procedure
Game theory
Dynamic programming
Issue Date: 2011-06
Series/Report no.: Cahiers du CIRPÉE;11-13
Abstract: We extend the contingent claims framework for the levered firm in explicitly modeling the resolution of financial distress under formal bankruptcy as a non-cooperative game between claimants under the supervision of the bankruptcy judge. The identity of the class of claimants proposing the first reorganization plan is found to be a key determinant of the likelihood of liquidation and of the renegotiated value of claims. Our quantitative results confirm the economic intuition that a bankruptcy design must trade-off the initial priority of claims with the viability of reorganized firms.
URI: https://depot.erudit.org/id/003503dd
Appears in Collections:Cahiers de recherche du CIRPÉE

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