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| Author: | Berlin, M. Mester, L.J. |
| Title: | Lender liability and large investors |
| Journal: | Journal of Financial Intermediation
2001 : APR, VOL. 10:2, p. 108-137 |
| Index terms: | INVESTORS SUBORDINATES |
| Freeterms: | LENDER LIABILITY |
| Language: | eng |
| Abstract: | The authors explore the optimal financial contract for a large investor with potential control over a firm's investment decisions. An optimal menu of claims resembles a U.S. version of lender liability doctrine - equitable subordination. This doctrine permits the court to subordinate a controlling investor's claim in bankruptcy, but only under well-specified conditions. |
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