Holding out on restructuring negotiations: A legal analysis over Finnish and Swedish legislation

Abstract This article examines how Finnish and Swedish restructuring laws create opportunities for creditors to hold out on restructuring negotiations. Using Anthony Casey's new bargaining theory and the traditional creditors' bargain model as analytical frames, the study argues that holdouts arise when ex ante rights – particularly security interests, procedural privileges, and statutory limitations – are preserved in ways that impede value‐preserving renegotiation ex post. Through a structured analysis of contract continuation rules, entry thresholds, security rights, cramdown design, and debt‐adjustment restrictions, the article shows key holdouts in the Swedish and Finnish restructuring frameworks. The most baffling holdout is discovered in the Finnish rule requiring the restructuring plan to preserve creditor rights as far as possible. Such a rule is in direct contradiction with the view that restructuring is about renegotiation rather than a one‐sided privilege of the debtor. The article offers an analysis of the justification of these holdout positions from the viewpoints of economic theory and policy goals.