Maximizing Enterprise Value and Minimizing “Hold Up Value”: Reorganizations in the United States under Chapter 11 of the US Bankruptcy Code
From the formation of the United States, the framers of the US Constitution understood that an integrated national economy and efficient capital markets are defined in part by the means to realize the value of distressed businesses and reallocate capital to more productive enterprises. As a result, the US Constitution empowers the federal government with the exclusive authority to establish bankruptcy laws that apply uniformly across all of the United States.1 The US Bankruptcy Code2 has since evolved to provide one of the most dynamic systems in the world to preserve, maximize and allocate value of distressed businesses through a broad range of transactions negotiated by those with financial interests at stake. Because businesses organized both inside and outside of the United States may be eligible for reorganization under the Bankruptcy Code, it has become part of the foundation for capital markets around the world.3 The Bankruptcy Code is a globally accepted example from which the United Arab Emirates may draw statutory tools to accelerate its economy and role in global financial markets by implementing national laws that maximize the value of insolvent businesses through reorganization.
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