Control Rights, Priority Rights, and the Conceptual Foundations of Corporate Reorganizations

This paper shows that the conventional understanding of corporate reorganizations is wrong. It might seem that the primary question when all cannot be paid in full is who gets what, but this question is in the first instance merely distributional. The central focus of corporate reorganizations should not be upon priority rights. Instead, as in corporate law generally, it should remain upon how the firm's assets are used and who controls them. This essay reexamines the foundations of corporate reorganizations.