Insolvency Law & Corporate Finance

 
Vakcode:
R_ILCF
Periode:
Periode 3
Credits:
6.0
Voertaal:
Engels
Faculteit:
Faculteit der Rechtsgeleerdheid
Coördinator:
prof. dr. J.L. Smeehuijzen
Examinator:
prof. dr. J.L. Smeehuijzen
Docenten:
prof. dr. J.L. Smeehuijzen
Lesmethode(n):
Hoorcollege
Niveau:
500

Doel vak

• After completing the course, students will have developed the
following capacities:
• Students understand the working of a balance sheet and its relation to
a profit and loss account.
• Students can perform basic company valuation.
• Students will have gained an understanding and working knowledge of
basic corporate finance concepts, such as debt vs equity, tax benefits
related to debt, leverage ratio’s, basic risk allocation and net present
value tests.
• Students can apply private law rules from different jurisdictions as
to the ranking of creditors (unsecured, secured and preferred) to
different corporate finance cases.
• Students understand and can reflect upon the different methods of debt
finance.
• Students can evaluate different rules on shareholder finance and the
liberty of stake holders to determine the capital structure of a firm
themselves. Students can also evaluate current finance practices against
the background of basic corporate law principles of limited liability.
• Students can assess the implications of different capital structure on
the risk profile of the company and how this creates different
incentives for management and shareholders.

Inhoud vak

Lawyers increasingly have to deal with financial information. Without
understanding financial information, they can often still do their job,
but don’t really understand what the larger project they are involved in
means for their clients and third parties. So they end up only executing
instructions from clients, without properly advising their clients.

This course starts with basic corporate finance. It starts with the
working of a balance sheet and the profit and loss account of company
and how they interrelate. It also includes company valuation methods,
such as Discounted Cash Flow.

The second party of the course provides a working knowledge of the
interrelation of basic corporate finance and law; for example how the
concepts of equity and debt translate into legal concepts of
shareholders and creditors and what the litmus test of Insolvency has to
say about these concepts. An understanding will be provided of how
corporate finance concepts such as solvency ratio’s, liquidity and
leverage relate to legal rules on directors’ liability. Also a critical
analysis will be provided of the assumptions underlying the traditional
debtor-creditor relationship, and whether these assumptions still hold
in the light of the great variety of creditors, ranging from
professional hedge funds to unsecured trade creditors and tort victims.
Also more sophisticated ways of finance will be discussed, such as a
Leveraged Buy-Outs. These will be discussed in the light of law’s
struggle to provide a suitable framework for leveraged forms of finance.
Furthermore, different forms of shareholder finance will be discussed,
among which financing by way of secured loans and guarantees, instead of
equity.

Onderwijsvorm

Lectures

Toetsvorm

Written in class exam.

Literatuur

Detailed information about reading materials and the topics to be dealt
with in class will be available on Canvas.

Doelgroep

This course is only open to students of the programme Law, Markets and
Behavior.

© Copyright Vrije Universiteit Amsterdam
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