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Death or survival. Post-communist bankruptcy law in action. A survey

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  • Schönfelder, Bruno

Abstract

The paper discusses some major lessons to be learnt from the application of bankruptcy law in a post-communist environment. Its focus is on East Central Europe because elsewhere bankruptcy law is of rather limited practical relevance. The incentives and the selection of trustees turn out to be key issues if the loss of value typically occuring during bankruptcy procedures is to be contained within reasonable limits. Reorganization is a realistic option only if management has sufficient incentives to file bankruptcy in time. Post-communist legislation has tried to achieve this mostly by threat of punishment. This approach has proved inefficient. The paper also criticizes the tendency of post-communist legislation to deemphasize individual remedies against defaulting debtors.

Suggested Citation

  • Schönfelder, Bruno, 2003. "Death or survival. Post-communist bankruptcy law in action. A survey," Freiberg Working Papers 2003/01, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
    • Handle: RePEc:zbw:tufwps:200301
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    References listed on IDEAS

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    1. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
    2. White, Michelle J, 1989. "The Corporate Bankruptcy Decision," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 129-151, Spring.
    3. Cargill, Thomas F. & Parker, Elliott, 2002. "Asian finance and the role of bankruptcy: a model of the transition costs of financial liberalization," Journal of Asian Economics, Elsevier, vol. 13(3), pages 297-318.
    4. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
    5. Bruno Schonfelder, 2001. "Debt Collection, Foreclosure and Bankruptcy in the Czech Republic: An Economic Analysis," Post-Communist Economies, Taylor & Francis Journals, vol. 13(4), pages 409-430.
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    JEL classification:

    • P37 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Legal
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
    • K49 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Other

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