DP2881 How to Sell a (Bankrupt) Company?
|Author(s):||Francesca Cornelli, Leonardo Felli|
|Publication Date:||July 2001|
|Keyword(s):||auctions, bankruptcy, private benefits, transfer of control|
|JEL(s):||D44, D82, G32, G33|
|Programme Areas:||Financial Economics, Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=2881|
The restructuring of a bankrupt company often entails its sale. This Paper suggests a way to sell the company that maximizes the creditors' proceeds. The key to this proposal is the option left to the creditors to retain a fraction of the shares of the company. Indeed, by retaining the minority stake, creditors can transfer the control of the company while reducing to a minimum the rents that the sale of the company leaves in the hands of the buyer.