Characterization and Optimization of Achievable Performance in General Queueing Systems

This is a dynamic time for insolvency law. Many jurisdictions have made or are considering reforms to their insolvency regimes. The United Kingdom has proposed a new standalone restructuring mechanism that incorporates many attributes of Chapter 11, including a cross‐class cram down and the absolute priority rule. A distinctive feature of the UK proposal is the infusion of judicial discretion permitting courts to deviate from the absolute priority rule. This discretion is not permitted in the United States. This judicial discretion addresses a key problem with the application of the absolute priority rule in the United States—it may serve as an impediment to reorganization. This impediment is exacerbated by the recent U.S. Supreme Court decision, Czyzewski v. Jevic Holding Corp., which impacts the effective use of Chapter 11 rescue tools. This article explores the absolute priority rule, the problems associated with it, and the effect of Jevic in the United States. Drawing on the UK reform proposal, I argue that the United States should implement reforms that infuse judicial discretion into the application of the absolute priority rule. Doing so will facilitate the underlying policy goal of rescuing the company in Chapter 11 and also promote a broader policy goal of rescuing the business.

The paper analyses the correlation between the various categories of strategic behaviours that may be adopted by the parties involved in a debt restructuring and the three types of priority rules that might apply: the so called “absolute priority rule” and “relative priority rule” and a rule that can be named “no priority rule”. More specifically, the article offers an overview of the literature concerning the opportunistic behaviours in a debt restructuring and reports a lack of categorisation and agreement on the meaning of the terms used to label such behaviours, revealing how this negatively affects the discussion on priority rules. Therefore, the paper aims at filling such gap, by presenting a systematic analysis of four categories of strategic behaviour: “holdout”, “holdup”, “free-riding” and “rent-seeking”. On the basis of such categorisation, the paper proceeds with an analysis of the ways in which each category of opportunistic behaviour is affected by the application of each of the “absolute priority rule”, the “relative priority rule” and the “no priority rule”.

ABSTRACTClaims ultimately awarded to shareholders of firms in reorganization were examined for a sample of 30 filings under the 1978 Bankruptcy Reform Act. We measured the amount paid to shareholders in excess of that which they would have received under the absolute priority rule and found that this amount represents, on average, 7.6% of the total awarded to all claimants. Evidence is also reported that common share values reflect a significant proportion of value ultimately received in violation of absolute priority, suggesting that deviations from the rule were expected by the equity markets.

ABSTRACTThis study shows the extent to which deviations from the absolute priority rule increase or decrease the bankruptcy emergence payoff to traded (i.e., usually junior claimants) bondholders. The data indicate that, on average, bondholders benefit, albeit slightly, from absolute priority rule (APR) violations. This paper also examines the degree to which the bond market, in the bankruptcy filing month, anticipates departures from the APR and other influences on the payoff to bondholders. In other words, we investigate the informational efficiency of the market for bankrupt bonds. Overall, despite the complex and lengthy nature of bankruptcy proceedings, the results support efficiency.

Bond prices in a debt priority structure with absolute priority rule deviation

That a firm's initial equityholders often emerge from Chapter 11 bankruptcy proceedings with more value than the absolute priority rule would suggest is now a generally accepted fact. The form in which this value is distributed, however, is less well understood. In particular, why do the original shareholders of some firms emerge from Chapter 11 bankruptcy with stock in the reorganized firm, while others receive warrants? This essay proposes that informational asymmetries provide the answer to this question. By proposing a reorganization plan in which they receive warrants, the original stockholders of a firm with good future prospects can signal their superior information to the creditors in a way that firms with poor prospects will not wish to mimic.

Asset Substitution, Debt Pricing, Optimal Leverage and Maturity

Court approval of a lender-led non-consensual restructuring plan filed by financial creditors without the debtor’ support and challenged by all the shareholders. The plan allows creditors to take control of the equity post-restructuring and to wipe-out pre-existing shareholders. The Court found that the necessary requirements were met due to the existence of imminent insolvency and the shareholders being "out of the money." This is a landmark case in Spain regarding the new fairness test, based on an agreement between the affected classes or, in its absence, on the enterprise value and its distribution amongst the insolvency ranks following the absolute priority rule.

The Paradox of Pledgeability

On the M/G/1 queueing system with multiclass customers and fixed feedback

In this paper, the waiting time and response time processes in continuous-time two parallel queueing systems are analyzed as well as the system size process in discrete-time two parallel queueing systems. Upon arrival, each job splits into two tasks, denoted by task 1 and task 2. Task k, $k = 1,2$, is assigned to the kth queueing system to be served on a FCFS (first-come-first-served) basis. Each queueing system consists of a single server and an infinite-capacity queue. For the continuous-time queueing system, we assume that jobs arrive in a state-independent Poisson fashion with rate $\lambda $; the servers have exponential service times with rates $\mu _1 $ and $\mu _2 $, respectively. A closed-form expression for the Laplace transform of the ergodic bivariate waiting time distribution is derived. The distribution of the sum of the two waiting times is then obtained. The distribution of the response time when $\mu _1 = \mu _2 $ is derived analytically. For the discrete-time queueing systems, it is assu...

In the chapter we describe the application of firefly algorithm in discrete optimization of simple queueing structures such as queueing systems. The optimization of these systems is complicated and there is not any universal method to solve such problem. We briefly cover basic queueing systems. Hence, Markovian systems with exponential service times and a Poisson arrival process with losses, with finite capacity and impatient customers and closed queueing system with finite number of jobs are presented. We consider structural optimization, for example maximization of overall profits and minimizing costs controlled by the number of servers. We show the results of performed experiments.

We analyzed an M/M/R queueing system with finite capacity N where customers have multiple classes with no priorities under steady-state conditions. It is assumed that any one class of arriving customer is serviced by one or more servers, and that each customer class has equal probability of service. Analytic explicit solutions are obtained with the assumption of exponential distributions for arrival times and service times. A cost model is developed to determine the optimal system capacity and the optimal number of servers. The minimum expected cost, the optimal system capacity, the optimal number of servers, and various system performance measures are obtained for three customer classes and four customer classes, based on assumed numerical values given to the designated system parameters.

The paper considers a classical M/M/1 queue with two priority classes under a preemptive priority discipline. Based on the performance measures of White and Christie [14], the paper studies the optimal pricing policy of the server who is an individual profit maximizer when the customers adopt their respective equilibrium arrival rate, then discusses the service rate control problem from the perspective of social welfare maximization. Because of the complexity of the model, it's intractable to theoretically analyze the queueing system in depth. In the section of example analyses, two numerical examples are presented, on the one hand to give the specifically optimal pricing policy and service rate control policy, and on the other hand to conduct some sensitivity analyses for some important parameters.

Queueing system with scheduled arrivals is useful in many fields where both customers' waiting time and servers' operation time (utilization) are important, and arrival time of customers is possible to be controlled. In this paper, we analyzed the operation of ship maintenance with the queueing system with scheduled arrival. Based on the model presented by Pegden and Rosenshine [8], who dealt with exponential service time, we extended the service time distributions to phase-type distribution which is able to include a wide range of real stochastic phenomena. Since most activities in the military are carried out under tight control and schedule, scheduled arrival queue has quite good applicability in this area. In this context, we applied queue with scheduled arrival to the optimal booking time decision for the ship maintenance in the navy.