Thread: How to Sell a (Bankrupt) Company

How to Sell a (Bankrupt) Company
Francesca Cornelli
(London Business School and CEPR)
Leonardo Felli
(London School of Economics)
March 2000
Abstract. The restructuring of a bankrupt company often entails the
sale of such company. 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 reduce to a minimum the rents that the
sale of the company leaves in the hands of the buyer.

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