Stefan van Hemmen () (Autonomous University of Barcelona)
Abstract
In this study we analyze the factors which, once a bankruptcy procedure begins in Spain, explain the results observed after the re-negotiation of the contracts between the debtor and the creditors. The multinomial logit model is used in order to specify the functional relationship between the financial characteristics of the firm and the outcomes observed in the bankruptcy system: a) restructuring; b) failed attempts to restructure which end in dismissal; and c) liquidations. The evidence (159 bankrupt firms have been included in the study) suggests that the processes of reassignment are not simply the result of chance, but rather that they result from a decision-making process where information which is contained in the financial statements is taken into account (the cases of liquidation reflect a greater deterioration in terms of historical trajectory of profits, measured by the reserves, as well as by a lesser capacity of the current generation of resources). Additionally, we connect to the corporate finance approach to contracts as a guide for analyzing the restructuring agreements agreed upon between the debtor and the non-privileged (also called ordinary) creditors. The results indicate that, the non-privileged creditors renounce a very significant part of the value of the debt and that there exists a positive relationship between the economic quality of the firm and the collection expectations by the creditors. Finally, the possibility that the creditors exercise ex post control over the managers is not foreseen.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Institute for Social and Economic Research in its series ISER working papers with number
2001-03.
Length: 25 Date of creation: Jan 2001 Date of revision: Handle: RePEc:ese:iserwp:2001-03
Contact details of provider: Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK Phone: 44-1206-872957 Fax: 44-1206-873151 Web page: http://www.iser.essex.ac.uk/
Order Information: Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK Email: Web: http://www.iser.essex.ac.uk/pubs/
For technical questions regarding this item, or to correct its listing, contact: (Paul Groves).