Andrew T. Guzman
University of Chicago
NBER Working Papers and Publications
|March 2000||An Economic Analysis of Transnational Bankruptcies|
with Lucian Arye Bebchuk: w6521
This paper analyzes the effects of the legal rules governing transnational bankruptcies. We compare a regime of territoriality' -- in which assets are adjudicated by the jurisdiction in which they are located at the time of the bankruptcy -- with a regime of universality are adjudicated in a single jurisdiction. Territoriality is shown to generate a distortion in investment patterns that might lead to an inefficient allocation of capital across countries. We also analyze who gains and who loses from territoriality, explain why countries engage in it even though it reduces global welfare, and identify what can be done to achieve universality.
Published: The Journal of Law and Economics, vol. XLII, no. 2, pp. 775-808, 1999. citation courtesy of