kaal:claim:1908473-037

Reorganization through contingent capital eliminates the holdout problem, because the majority of contingent capital holders, or those holders together with shareholders, determine governance after conversion, so a lone dissenter cannot collect more than other creditors.

Source quote, verbatim

The majority of CCS holders, or CCS holders and shareholders combined, determine corporate governance after conversion and prior to resolution. A sole holdout of consent will therefore not enable any creditor to collect more than any other creditor.

From

Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011), VI.C. Chameleon Equity, p. 57
https://ssrn.com/abstract=1908473 · source PDF

Cite as

Wulf A. Kaal, Christoph Henkel, Contingent Capital with Sequential Triggers (2011). SSRN: https://ssrn.com/abstract=1908473

Holds when

Applies after conversion and before resolution
The holdout who becomes a shareholder shares losses proportionate to equity ownership

Classification

mechanismsupport: arguedinstitutional-design

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