On Deviating from Absolute Priority: The Case of Tort Claims and Active Creditors
Bibliographic record
Abstract
The impact of deviating from absolute priority rule, a basic tenet of bankruptcy law that accords secured creditors a privileged position in bankruptcy distribution, has long been at the centre of research on bankruptcy. This paper develops a model of a firm that can cause an accident and then claim bankruptcy to investigate the ex ante effects of elevating tort claims a head of creditors. In the model, the firm (or its manager) controls an unobservable care (or effort) decision. The creditor not only provides the requisite capital, but also exercises control over the firm by virtue of its significant cash flow rights. Together managerial care and creditor control determine the distribution of the tortious harm. We find that according tort claims a privileged position relative to creditors leads to a shift away from managerial care and towards more creditor control. As a consequence, subordinating secured creditor has an ambiguous effect on the expected social welfare.
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How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.007 | 0.023 |
| Meta-epidemiology (narrow) | 0.001 | 0.001 |
| Meta-epidemiology (broad) | 0.002 | 0.001 |
| Bibliometrics | 0.001 | 0.001 |
| Science and technology studies | 0.003 | 0.012 |
| Scholarly communication | 0.006 | 0.007 |
| Open science | 0.002 | 0.004 |
| Research integrity | 0.006 | 0.007 |
| Insufficient payload (model declined to judge) | 0.010 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".