Why Do Distressed Companies Choose Delaware? An Empirical Analysis of Venue Choice in Bankruptcy

We analyze a sample of large Chapter 11 cases to determine which factors motivate the choice of filing in one court over another when a choice is available. We focus in particular on the Delaware court, which became the most popular venue for large corporations in the 1990s. We find no evidence of agency problems governing the venue choice or affecting the outcome of the bankruptcy process. Instead, firm characteristics and court characteristics, particularly a court\u27s level of experience, are the most important factors. We find that court experience manifests itself in both a greater ability to reorganize marginal firms and in reorganizing such firms faster. Delaware is similar to other high-experience courts in terms of the likelihood of reorganization controlling for firm characteristics, but is a standout in terms of speed. We estimate that a Delaware bankruptcy requires approximately 40% less time to complete than an equivalent case in another court

Bankruptcy or Bailouts?

The usual reaction if one mentions bankruptcy as a mechanism for addressing a financial institution’s default is incredulity. Those who favor the rescue of troubled financial institutions, and even those who prefer that their assets be promptly sold to a healthier institution, treat bankruptcy as anathema. Everyone seems to agree that nothing good can come from bankruptcy. Indeed, the Chapter 11 filing by Lehman Brothers has been singled out by many the primary cause of the severe economic and financial contraction that followed, and proof that bankruptcy is disorderly and ineffective. As a result, ad-hoc rescue lending to avoid bankruptcy has been the preferred solution. In this Article, we seek to provide the first careful assessment of the belief that governmental rescues are preferable to bankruptcy. While the interaction of financial firms, systemic risk, and Chapter 11 is complex, our analysis suggests that the widespread belief that bankruptcy should not be used to resolve the distress of financial firms is misguided, and that it has had serious costs in the recent crisis. Although bankruptcy is not always the optimal response to financial distress, it is more effective than is generally realized. In Parts I and II of the Article, we describe the principal problems created by financial distress—debt overhang and creditor runs—and the mechanisms bankruptcy provides for addressing these problems. We then provide historical context in Part III, looking to Drexel Burnham’s bankruptcy in 1990 for further lessons about the efficacy of bankruptcy. In Part IV, we turn to firm-specific bailouts, describing this strategy’s benefits and the distortions it causes. We then shift our focus back to bankruptcy, considering the (legitimate) concern that it may not adequately counteract systemic risk in Part V, and exploring its treatment of derivatives, one of the chief new habitats of systemic risk, in Part VI. Part VII is a brief conclusion

Bankruptcy or Bailouts?

The usual reaction if one mentions bankruptcy as a mechanism for addressing a financial institution’s default is incredulity. Those who favor the rescue of troubled financial institutions, and even those who prefer that their assets be promptly sold to a healthier institution, treat bankruptcy as anathema. Everyone seems to agree that nothing good can come from bankruptcy. Indeed, the Chapter 11 filing by Lehman Brothers has been singled out by many the primary cause of the severe economic and financial contraction that followed, and proof that bankruptcy is disorderly and ineffective. As a result, ad-hoc rescue lending to avoid bankruptcy has been the preferred solution. In this Article, we seek to provide the first careful assessment of the belief that governmental rescues are preferable to bankruptcy. While the interaction of financial firms, systemic risk, and Chapter 11 is complex, our analysis suggests that the widespread belief that bankruptcy should not be used to resolve the distress of financial firms is misguided, and that it has had serious costs in the recent crisis. Although bankruptcy is not always the optimal response to financial distress, it is more effective than is generally realized. In Parts I and II of the Article, we describe the principal problems created by financial distress—debt overhang and creditor runs—and the mechanisms bankruptcy provides for addressing these problems. We then provide historical context in Part III, looking to Drexel Burnham’s bankruptcy in 1990 for further lessons about the efficacy of bankruptcy. In Part IV, we turn to firm-specific bailouts, describing this strategy’s benefits and the distortions it causes. We then shift our focus back to bankruptcy, considering the (legitimate) concern that it may not adequately counteract systemic risk in Part V, and exploring its treatment of derivatives, one of the chief new habitats of systemic risk, in Part VI. Part VII is a brief conclusion

A Hybrid N-body--Coagulation Code for Planet Formation

We describe a hybrid algorithm to calculate the formation of planets from an initial ensemble of planetesimals. The algorithm uses a coagulation code to treat the growth of planetesimals into oligarchs and explicit N-body calculations to follow the evolution of oligarchs into planets. To validate the N-body portion of the algorithm, we use a battery of tests in planetary dynamics. Several complete calculations of terrestrial planet formation with the hybrid code yield good agreement with previously published calculations. These results demonstrate that the hybrid code provides an accurate treatment of the evolution of planetesimals into planets.Comment: Astronomical Journal, accepted; 33 pages + 11 figure

Computational Physics on Graphics Processing Units

The use of graphics processing units for scientific computations is an emerging strategy that can significantly speed up various different algorithms. In this review, we discuss advances made in the field of computational physics, focusing on classical molecular dynamics, and on quantum simulations for electronic structure calculations using the density functional theory, wave function techniques, and quantum field theory.Comment: Proceedings of the 11th International Conference, PARA 2012, Helsinki, Finland, June 10-13, 201

A weakly stable algorithm for general Toeplitz systems

We show that a fast algorithm for the QR factorization of a Toeplitz or Hankel matrix A is weakly stable in the sense that R^T.R is close to A^T.A. Thus, when the algorithm is used to solve the semi-normal equations R^T.Rx = A^Tb, we obtain a weakly stable method for the solution of a nonsingular Toeplitz or Hankel linear system Ax = b. The algorithm also applies to the solution of the full-rank Toeplitz or Hankel least squares problem.Comment: 17 pages. An old Technical Report with postscript added. For further details, see http://wwwmaths.anu.edu.au/~brent/pub/pub143.htm

Molecular Dynamics Simulations Suggest that Electrostatic Funnel Directs Binding of Tamiflu to Influenza N1 Neuraminidases

Oseltamivir (Tamiflu) is currently the frontline antiviral drug employed to fight the flu virus in infected individuals by inhibiting neuraminidase, a flu protein responsible for the release of newly synthesized virions. However, oseltamivir resistance has become a critical problem due to rapid mutation of the flu virus. Unfortunately, how mutations actually confer drug resistance is not well understood. In this study, we employ molecular dynamics (MD) and steered molecular dynamics (SMD) simulations, as well as graphics processing unit (GPU)-accelerated electrostatic mapping, to uncover the mechanism behind point mutation induced oseltamivir-resistance in both H5N1 “avian” and H1N1pdm “swine” flu N1-subtype neuraminidases. The simulations reveal an electrostatic binding funnel that plays a key role in directing oseltamivir into and out of its binding site on N1 neuraminidase. The binding pathway for oseltamivir suggests how mutations disrupt drug binding and how new drugs may circumvent the resistance mechanisms

A Quantum-mechanical Approach for Constrained Macromolecular Chains

Many approaches to three-dimensional constrained macromolecular chains at thermal equilibrium, at about room temperatures, are based upon constrained Classical Hamiltonian Dynamics (cCHDa). Quantum-mechanical approaches (QMa) have also been treated by different researchers for decades. QMa address a fundamental issue (constraints versus the uncertainty principle) and are versatile: they also yield classical descriptions (which may not coincide with those from cCHDa, although they may agree for certain relevant quantities). Open issues include whether QMa have enough practical consequences which differ from and/or improve those from cCHDa. We shall treat cCHDa briefly and deal with QMa, by outlining old approaches and focusing on recent ones.Comment: Expands review published in The European Physical Journal (Special Topics) Vol. 200, pp. 225-258 (2011

G protein-coupled receptor-mediated calcium signaling in astrocytes

Astrocytes express a large variety of G~protein-coupled receptors (GPCRs) which mediate the transduction of extracellular signals into intracellular calcium responses. This transduction is provided by a complex network of biochemical reactions which mobilizes a wealth of possible calcium-mobilizing second messenger molecules. Inositol 1,4,5-trisphosphate is probably the best known of these molecules whose enzymes for its production and degradation are nonetheless calcium-dependent. We present a biophysical modeling approach based on the assumption of Michaelis-Menten enzyme kinetics, to effectively describe GPCR-mediated astrocytic calcium signals. Our model is then used to study different mechanisms at play in stimulus encoding by shape and frequency of calcium oscillations in astrocytes.Comment: 35 pages, 6 figures, 1 table, 3 appendices (book chapter