Systemic Financial Distress and Auction-Based Bankruptcy Reorganization

Financial reorganization under bankruptcy reduces a firm's debts to a serviceable level through negotiations overseen by courts. Markets have been suggested as an alternative to such negotiations, recognizing that equity holders and junior claimants have call options to buy the firm back from senior creditors. This paper further develops this market-based approach when claimants are severely cash-constrained and there is merit in having existing owners-managers remain in control. The scheme arranges creditors in a queue to be serviced in sequence from the firm's operating cash flows. Creditors bid for their position in this queue, and those accepting a greater proportionate reduction in the face value of their claims (perhaps those most pessimistic about the firm's prospects) are placed ahead of the others. A pre-existing hierarchy of claims is honored by having claimants bid for their positions within the relevant segment of the queue. No one in the queue (including owners who are last) is paid anything until the (reduced) debts of the first in line are fully discharged using the firm's operating cash surpluses. The queue then moves up and the next claimant in line is serviced. The paper shows that, in equilibrium, the aggregate debts of the firm are reduced to a level that is more serviceable and that provides the owner-manager with a positive expected residual return. We discuss the appropriateness of this scheme to situations of systemic financial distress, including the East Asian crisis.

Bankruptcy reorganization through markets : Auction-based Creditor Ordering by Reducing Debts (ACCORD)

The authors further develop such a market-based approach for situations in which claimants are severely cash-constrained and there is good reason for existing owner-managers to remain in control. Under the ACCORD scheme-Auction-based Creditor Ordering by Reducing Debts-creditors remain creditors but form a queue, to be serviced in sequence from the firm's operating cash flows. Creditors bid for their position in this queue. Those accepting greater proportionate reductions in the face value of their claims (perhaps most pessimistic about the firm's prospects) are placed ahead of theothers. A preexisting hierarchy of claims is honored by having claimants bid for their positions within the relevant segment of the queue. No one in the queue, including owners (whoa re last), is paid anything until the (reduced) debts of the first in line are fully discharged. The queue then moves up and the next claimant in line is serviced. Deferred creditors, who must wait their turn for the firm's operating cash surpluses, are not junior creditors in the conventional sense. The authors determine equilibrium bidding strategies, showing that the firm's aggregate debts would be reduced to a more serviceable level. This would improve the incentives of the firm's owner-managers, who remain in control, to operate the firm efficiently. Economic resources would thus be better used, and losses already incurred would be efficiently and quickly allocated among creditors. The authors suggest that ACCORD would be appropriate for East Asia, where, despite new bankruptcy laws, inexperienced courts are unlikely to nudge creditors into a quick negotiated agreement nor to be able to cope with systemic bankruptcy. Moreover, when the government is a major unsatisfied creditor, whose agents may not act in the taxpayers'best interests, market-based solutions might remove political interference from restructuring decisions. Neither owners nor creditors would be worse off than they are now.Strategic Debt Management,Banks&Banking Reform,Payment Systems&Infrastructure,International Terrorism&Counterterrorism,Economic Theory&Research,International Terrorism&Counterterrorism,Strategic Debt Management,Banks&Banking Reform,Economic Theory&Research,Housing Finance

Anomalous lateral diffusion in a viscous membrane surrounded by viscoelastic media

We investigate the lateral dynamics in a purely viscous lipid membrane surrounded by viscoelastic media such as polymeric solutions. We first obtain the generalized frequency-dependent mobility tensor and focus on the case when the solvent is sandwiched by hard walls. Due to the viscoelasticity of the solvent, the mean square displacement of a disk embedded in the membrane exhibits an anomalous diffusion. An useful relation which connects the mean square displacement and the solvent modulus is provided. We also calculate the cross-correlation of the particle displacements which can be applied for two-particle tracking experiments.Comment: 6 pages, 2 figure

Search for Discrete Refractive Scattering Events

We have searched for discrete refractive scattering events (including effects due to possible non-multiple diffractive scattering) at meter wavelengths in the direction of two close by pulsars B0950+08 and B1929+10, where we looked for spectral signatures associated with the multiple imaging of pulsars due to scattering in the interstellar medium. We do not find any signatures of such events in the direction of either source over a spectral periodicity range of 50 KHz to 5 MHz. Our analysis puts strong upper limits on the column density contrast associated with a range of spatial scales of the interstellar electron density irregularities along these lines of sight.Comment: Accepted for publication in Astronomy & Astrophysic

Distress in Hirakud Dam, Orissa, India – Possible Causes and Remedial Measures

Distress has been observed in the above dam, on its right spillway immediately after its completion in 1957. The distress has been intensified in the eighties with development of thin horizontal cracks in the undersluice barrels, gate gallery and adjoining areas at a level 18m above bed. These have all been chiselled, opened up and epoxy grouted; besides with water proof cement. But parallel cracks opened up soon after. Studies in detail carried out by various government organisations point out that rapid placement of concrete in ’55 - ‘56 leading to thermal stress is the main cause. Though some attribute it to alkali aggregate reaction because of strained quartz in the aggregates. Further studies and remedial measures are under way

Preparation of Nitrogen-free Sulphuric Acid

Preparation of Nitrogen-free Sulphuric Aci

Scientific Research: Opportunities and Threats

In the first half of this talk, Dr. Ramu will present a few recent developments in chemistry, physics, and biology to set the stage for discussing the challenges and opportunities awaiting the next generation of scientists. In the second half of the talk, he will discuss some of the existential threats that we must understand and address in order to ensure that our future, both as inhabitants of this planet and as scientists engaged in fundamental research, is as secure as we can make it

Multidimensional poverty index (MPI) – a tool for estimating poverty

Multidimensional poverty index (MPI) – a tool for estimating povert