The conclusion is that creditor duties, or wrongful trading rules, are superfluous, while private solutions are still inadequate to solve all the agency problems in a way that the proponents of both types of creditor protections aim for.
But that reflects the risk each type of creditor took.
"It seems unfair to me that you're singling out one type of creditor to bear the burden, and another type not to".
In addition to making it harder to file for bankruptcy, the bill effectively rearranged what types of payments creditors could seize during the bankruptcy process.
The upshot of the analysis is that both types of rules protect creditors, but the same can be said of specific contractual solutions.
"This is quite a significant step to impose losses on any sort of senior bank creditor," said Alastair Wilson, chief credit officer at Moody's Investors Service, who views depositors as a type of senior creditor.
The French law of 1985, however, subordinates all types of security interests to the rights of creditors originating during the period between the order instituting the procedure for economic rehabilitation or liquidation and the order of liquidation, and there is a general complaint against the consumption of the assets by secured creditors.
Mr. Lavagna predicted the debt renegotiation process would be long and arduous, since it involved 150 types of bonds issued by eight separate jurisdictions to thousands of creditors.
As a result, the response of creditors is to rely more on some types of collateral such as personal guarantees and accounts receivable that can be realised directly by secured creditors and are not diluted by preferential creditors.
"There will probably be a credit event," he said of the likelihood that credit-default swaps, a type of insurance against creditors reneging on their loans, will be initiated — a signal that Greece is technically in default.
