Derivative contracts, swaps, and repos enjoy "super-senior" status in bankruptcy: they are exempt from the automatic …, even though this risk could be borne more efficiently by derivative counterparties. In addition, because super …-senior derivatives dilute existing creditors, they may lead firms to take on derivative positions that are too large from a social …

hedging, and investment. We determine a firm's optimal cash, investment, asset sales, credit line, external equity finance … and asset sales costs; and 6) the return and covariance characteristics of hedging assets the firm can invest in. The … its cash. In between the two barriers, the firm adjusts its capital expenditures, asset sales, and hedging policies …

hedging) can be value-maximizing for financially constrained firms …