The Impact of Reorganization Law on Valuation of Financial-distressed Company and Piecemeal Voluntary Corporate Liquidations
Date Issued
2006
Date
2006
Author(s)
Chiu, Pei-Kuan
DOI
zh-TW
Abstract
Name: Pei-Kuan Chiu
Adviser: Chi-Chun Liu
The Impact of Reorganization Law on Valuation of Financial-distressed Company and Piecemeal Voluntary Corporate Liquidations
Reorganization and liquidation are not common among enterprises, but still some enterprises are facing unwillingly financial distress. For deeply distressed firms, different legal processes, such as reorganization or liquidation, must be fulfilled. However, which process is the most fitted for a company depends on all conditions inside and outside the company. The law, which helps the company to take the right way, fails to meet its objective mostly. One reason is the inability of court to judge the financial distressed company precisely. Strategic behavior plays the most important role in the battle field of value assessment, thus resulting in a bias which leads to wrong court decision between reorganization and liquidation. Parties who want to enter reorganization process prefer a high value of financial distress company, and parties who want to enter liquidation process are quite the opposite. This kind of distortion is not only time consuming but also revokes thousands of debates on reorganization law itself. Some people even dramatically accuse that the reorganization law should be abandoned.
This essay hopes to find a way to diminish the incentives of distortion, and find a relief for the controversial reorganization law. A possible solution might be piecemeal voluntary corporate liquidations. Though the environment is not ripe for piecemeal voluntary corporate liquidations in Taiwan, we can enrich asset sale possibilities. In the end, this paper provides a new insight into transforming the traditional reorganization concept. That is, in addition to rebirth or decease, there is another choice for a financial distressed company.
Subjects
重整
財務困難
債務清理
重建
破產
策略行為
評價
破產成本
公開發行公司
清算
分批自願清算
擔保債權人
紛爭解決一次性
擔保權
程序轉換
倫敦模式
簡易重整
法院外重整
Reorganization Law
Piecemeal Voluntary Corporate Liquidations
distressed Company
bankruptcy
Chapter 11
London Approach
securied
Strategic behavior
Type
other
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