Economic Reasons for the Nonhindrance of Creditors Per Se Rule? A Reply

This paper examines a recently proposed per se rule to automatically treat as equity secured loans granted by shareholders to the corporation on the eve of insolvency. It shows that arguments based on the dual quality of the lender-shareholder are insufficient by themselves to propose such a rigid r...

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Bibliographic Details
Published in:	European business organization law review Vol. 8; no. 3; pp. 401 - 411
Main Author:	Muro, Sergio A.
Format:	Journal Article
Language:	English
Published:	The Hague, NL T.M.C. Asser Press 01-09-2007 Springer Nature B.V
Subjects:	Bankruptcy Commercial law Creditors Debt Efficiency Equity Federal court decisions Federal courts Insolvency Loans Proposals Regulation Secured loans Stockholder loans Stockholders Studies risk shifting secured debt agency recharacterisation corporate reorganisation fraudulent conveyance bankruptcy priority shareholder loans corporations
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Summary:	This paper examines a recently proposed per se rule to automatically treat as equity secured loans granted by shareholders to the corporation on the eve of insolvency. It shows that arguments based on the dual quality of the lender-shareholder are insufficient by themselves to propose such a rigid rule, which would curb potentially socially beneficial loans. Further empirical research is needed to shed light on this issue.
ISSN:	1566-7529 1741-6205
DOI:	10.1017/S1566752907004016