The Law of Corporate Debt: A Unifying Theory: 3CL Webinar
Channel: Cambridge Law Faculty
Date: 2021-02-10

Speaker: Professor Richard Squire (Fordham Law School)

Chair: Felix Steffek (University of Cambridge)

We offer a theory of the law of corporate debt: the numerous statutory and judge-made mechanisms that augment, amend or override contracts between business corporations and their creditors. Examples include bankruptcy law, fraudulent-transfer law, secured transactions and veil piercing. We argue that the proper role of all such positive-law mechanisms is to reduce the conflict costs of debt, which result from the conflict of interests produced by the structure of debt claims. That structure induces corporate debtors and their creditors to engage in value-destroying conduct that benefits the actor not by creating wealth but rather by shifting losses onto others. Coordination costs and uncollectable damages constrain contract law’s capacity to deter such conduct. But positive law cannot eliminate the conflict costs of debt altogether; there is an unavoidable tradeoff between the costs of debtor control and the costs of creditor control.

Professor Richard Squire has been a member of the faculty of Fordham University School of Law since 2006. He publishes primarily on the subjects of corporate law and corporate bankruptcy, and he has also written articles on antitrust and securities regulation. His articles have been published in the Harvard Law Review, Yale Law Journal, Columbia Law Review, University of Chicago Law Review, and the Journal of Law and Economics, among other journals. Professor Squire holds a J.D. from Harvard Law School and an MBA from Harvard Business School.

For more information see: https://www.3cl.law.cam.ac.uk/centre-activities