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“There is only one law in shipping: there is no law in shipping” Sami Ofer (shipping magnate)

Most countries limit freedom of contracting in bankruptcy through mandatory procedures. These state-mandated procedures are justified on the grounds of costly co-ordination failures between creditors. While co-ordination failures are costly, so are limits placed on the freedom to contract. Unfortunately, we have little evidence of how a freedom-of-contracting approach in distress and bankruptcy would work and its comparative efficiency. Professor Franks' lecture will be based on his study co-authored by Oren Sussman of the Said Business School and Vikrant Vig of the London Business School which attempts to fill this gap by examining the shipping industry. Because of the ex-territorial nature of its assets, the resolution of financial distress is largely resolved without resort to national bankruptcy codes. The unregulated nature of the industry makes shipping a unique natural experiment with spontaneous order that evolves from a decentralised development of market-based institutions.

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