Inside Debt Financing

Theory, Practice, and Regulatory Approaches

Authors

Alessandro Pomelli

Synopsis

Debt finance raised from corporate insiders has attracted the attention of legal scholars over the past several years. Such an interest comes as no surprise. The variety of legal treatments reserved for insider loans across Europe, the United States and in other jurisdictions attests to an intriguing absence of any regulatory uniformity despite similar financing patterns. After reviewing the literature on the benefits and costs of inside debt financing and illustrating the diverse regulatory approaches adopted by prominent jurisdictions, the book reassesses the risk of opportunistic insider lending based on the state of a company’s finances. In doing so, the book sheds light on the net costs associated with financially sound firms issuing senior debt, whether secured or unsecured, to their insiders and, by contrast, the net benefits of allowing insiders to make senior unsecured loans to firms that are in or near insolvency. Following the reexamination of the benefits and costs of insider lending, novel requirements are recommended for an efficient and fair legal response to inside debt as a source of funding for both solvent firms and financially-distressed ones.

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Author Biography

Alessandro Pomelli

He is Associate Professor of Commercial Law at University of Bologna. He has been Visiting Professor at the Universities of Hamburg, Tel Aviv, Haifa and at China University of Political Science and Law (Beijing). Author of articles on corporate governance, takeover law and securities regulation, his main research interests lie in the law & economics and law & finance of corporations and capital markets. He has been involved in policy work with the European Commission and in 2016 was appointed expert for the European Parliament in corporate law.

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Published

February 2, 2023

License

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Details about the available publication format: PDF

PDF

ISBN-13 (15)

9788835150800

Date of first publication (11)

2023-02-02

Details about the available publication format: EPUB

EPUB

ISBN-13 (15)

9788835152439

Date of first publication (11)

2023-02-02