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Does court-supervised reorganization work? Evidence from post-confirmation firm failure

Author Info

Listed author(s):
  • Leyman, Bart
  • Schoors, Koen J.L.
  • Coussement, Peter

Abstract

Unlike the US Chapter 11, the Belgian reorganization legislation requires that distressed firms remain temporarily under court-supervision during the post-confirmation stage. Using a hand-collected sample of firms, we analyze the likelihood of business failure and the time to failure during this period. Less viable firms are more likely to fail and do faster so, indicating relatively effective reorganization proceedings. Firms that are indebted to highly secured banks or owe high sums of unpaid taxes are more likely to fail. Judicial discretion affects the likelihood of failure only in a subsample of sole proprietorships.

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File URL: http://www.sciencedirect.com/science/article/pii/S0144818811000238
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Article provided by Elsevier in its journal International Review of Law and Economics.

Volume (Year): 31 (2011)
Issue (Month): 3 (September)
Pages: 149-168

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Handle: RePEc:eee:irlaec:v:31:y:2011:i:3:p:149-168
Contact details of provider: Web page: http://www.elsevier.com/locate/irle

Keywords: Court-supervised reorganization Bankruptcy Financial distress Judicial discretion Debt structure;

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Cited by:

  1. Huang, Jiang-Chuan & Huang, Chin-Sheng & You, Chun-Fan, 2015. "Bank relationships and the likelihood of filing for reorganization," International Review of Economics & Finance, Elsevier, vol. 35(C), pages 278-291.
  2. Sofie Balcaen & Sophie Manigart & Jozefien Buyze & Hubert Ooghe, 2012. "Firm exit after distress: differentiating between bankruptcy, voluntary liquidation and M&A," Small Business Economics, Springer, vol. 39(4), pages 949-975, November.
  3. Jaka Cepec & Peter Grajzl & Katarina Zajc, 2016. "Debt Recovery in Firm Liquidations: Do Liquidation Trustees Matter?," CESifo Working Paper Series 6034, CESifo Group Munich.

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