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Are firms on the right page with Chapter 11? An analysis of firm choices that contribute to post-bankruptcy survival

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  • Vicki L. Bogan
  • Chad M. Sandler

Abstract

Historically, corporate bankruptcy reorganization has generated varying results with respect to subsequent firm performance. Some firms reorganize effectively and emerge as more efficient and productive enterprises. However, other inefficient companies strive to survive by utilizing the rehabilitative process of Chapter 11; though liquidation might be a more suitable course of action. This study investigates which characteristics of firm performance and Chapter 11 bankruptcy are linked to successful emergence upon reorganization. We find that the strongest contributor to post-bankruptcy survival is having new management in place. This suggests that Chapter 11 can be utilized as an effective rehabilitative tool in the ‘right hands’.

Suggested Citation

  • Vicki L. Bogan & Chad M. Sandler, 2012. "Are firms on the right page with Chapter 11? An analysis of firm choices that contribute to post-bankruptcy survival," Applied Economics Letters, Taylor & Francis Journals, vol. 19(7), pages 609-613, May.
    • Handle: RePEc:taf:apeclt:v:19:y:2012:i:7:p:609-613
    DOI: 10.1080/13504851.2011.591721
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    Cited by:

    1. Lara Abdel Fattah & Sylvain Barthelemy & Nadine Levratto & Benjamin Trempont, 2016. "Post-reorganization survival: a semi-parametric and non-parametric analysis of firm characteristics," Working Papers hal-04141587, HAL.
    2. Jaka Cepec & Peter Grajzl, 0. "Management turnover, ownership change, and post-bankruptcy failure of small businesses," Small Business Economics, Springer, vol. 0, pages 1-27.
    3. Lara Abdel Fattah & Sylvain Barthélémy & Nadine Levratto & Benjamin Trempont, 2016. "Post-reorganization survival: a semi-parametric and non-parametric analysis of firm characteristics," EconomiX Working Papers 2016-22, University of Paris Nanterre, EconomiX.
    4. Jaka Cepec & Peter Grajzl, 2021. "Management turnover, ownership change, and post-bankruptcy failure of small businesses," Small Business Economics, Springer, vol. 57(1), pages 555-581, June.
    5. Sanjiv Jaggia & Satish Thosar, 2019. "An evaluation of chapter 11 bankruptcy filings in a competing risks framework," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 43(3), pages 569-581, July.
    6. Florian Habermann & Felix Bernhard Fischer, 2023. "Corporate Social Performance and the Likelihood of Bankruptcy: Evidence from a Period of Economic Upswing," Journal of Business Ethics, Springer, vol. 182(1), pages 243-259, January.
    7. European Commission, Directorate-General for Competition (Brussels) (ed.), 2016. "Ex-post evaluation of the impact of restructuring aid decisions on the viability of aided (non-financial) firms: Final report," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 130514.

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