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Security Interests and Bankruptcy Priorities: A Review of Current Theories

Schwartz, Alan (1980) Security Interests and Bankruptcy Priorities: A Review of Current Theories. Social Science Working Paper, 334. California Institute of Technology , Pasadena, CA. (Unpublished)

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This paper reviews positivist theories respecting why firms issue secured debt and normative theories purporting to justify the first priority status that secured debt occupies in bankruptcy liquidations. It shows that both sets of theories leave much firm behavior and legal regulation unaccounted for. The current consensus to the contrary among legal scholars is thus misplaced.

Item Type:Report or Paper (Working Paper)
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Additional Information:I would like to thank John Borgo, David Carroll, Robert Forsythe, Michael J. Graetz, George Priest, Robert E. Scott and Louis L. Wilde for very helpful suggestions. This paper also benefited substantially from comments received at the Law and Economics Workshop at the University of Chicago and the USC Faculty Workshop. Portions of this paper appear in revised form in Alan Schwartz and Robert E. Scott, Commercial Law: Principles and Policies, 1991. Published as Schwartz, Alan. "Security interests and bankruptcy priorities: a review of current theories." The Journal of Legal Studies 10.1 (1981): 1-37.
Group:Social Science Working Papers
Subject Keywords:Creditors, Secured debt, Secured creditors, Debtors, Bankruptcy Code, Security interests, Credit risk, Creditor claims, Bankruptcy, Interest rates
Series Name:Social Science Working Paper
Issue or Number:334
Record Number:CaltechAUTHORS:20171009-165955753
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82243
Deposited By: Jacquelyn Bussone
Deposited On:10 Oct 2017 16:00
Last Modified:03 Oct 2019 18:52

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