A critique of the bankruptcy proposal by Aghion, Hart and Moore
Dilger Alexander
Zusammenfassung
The article is a critique of the famous proposal for bankruptcy reform by Aghion, Hart and Moore. Aghion et al. propose to allocate voting rights according to Bebchuk's or some simpler scheme. The owners of these rights can choose between collected cash and non-cash bids for the former insolvent firm. There will be no substantial cash bids, however, since the bidders anticipate the opportunistic behavior that is open to the seller by voting on the bids. The seller cannot commit to follow the announced auction rule, and therefore could renegotiate to get a price as high as the highest valuation revealed by serious bids. A vote on non-cash bids is also unnecessary as new shareholders can make all important decisions without these bids. Moreover, Bebchuk's scheme is more convincing than its alternatives.