Title

External administration in corporate insolvency and reorganisation: The insider alternative

Date of this Version

7-2015

Document Type

Journal Article

Publication Details

Citation only

Chapple, L., & Routledge, J. (2015). External administration in corporate insolvency and reorganisation: The insider alternative. Insolvency Law Journal, 23 (2), 69-80.

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2015 HERDC submission

© Copyright,Thomson Reuters, 2015

ISSN

1039-3293

Abstract

This article considers the merits of alternative policy approaches to management of companies in insolvency administration, in particular from an identity economics theoretical perspective. The use of this perspective provides a novel assessment of the policy alternatives for insolvency administration, which can be characterised as either following the more flexible United States Chapter 11-style debtor-in-possession arrangement, or relying on the appointment of an external administrator or trustee to manage the insolvent company, who automatically displaces incumbent management. This analysis indicates that stigma and reputational damage from automatic removal of managers in voluntary administration leads to “identity loss” and that an insider alternative to the current external administration approach could be a beneficial policy change.

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This document has been peer reviewed.