Serving the creditors after insolvency filings: from value creation to value distribution

Blazy, Régis; Petey, Joël; Weill, Laurent

doi:10.1007/s10657-017-9560-9

Cited by 13 publications

(10 citation statements)

References 35 publications

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“…Table 11 column (4)) into an indirect cost of RJ. According toBlazy et al (2018), recovery rates in France in continuation are around 73% for unsecured creditors and 75% for secured creditors, with the analogous figures in liquidation being 5% and 35%. In our sample, the average firm entering Sauvegarde has a debt to asset ratio of 80% (see Table3), 75% of which is secured.23 These numbers lead to indirect costs of 20% of the firm's book assets if shareholders lose everything, in both continuation and liquidation.…”

mentioning

confidence: 99%

Bankruptcy costs and the design of preventive restructuring procedures

Épaulard¹,

Zapha²

2022

Journal of Economic Behavior & Organization

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confidence: 99%

Bankruptcy costs and the design of preventive restructuring procedures

Épaulard¹,

Zapha²

2022

Journal of Economic Behavior & Organization

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“…We can convert the reduction by 50 pp in the probability of reaching a debt agreement after conversion (see Table 11 column ( 4)) into an indirect cost of RJ. According to Blazy et al (2018), recovery rates in France in continuation are around 73% for unsecured creditors and 75% for secured creditors, with the analogous figures in liquidation being 5% and 35%. In our sample, the average firm entering Sauvegarde has a debt to asset ratio of 80% (see Table 3), 75% of which is secured.…”

Section: Economic Importance and External Validitymentioning

confidence: 99%

Bankruptcy Costs and the Design of Preventive Restructuring Procedures

Épaulard

Zapha

2021

SSRN Journal

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A European directive requires Member States to give firms access to preventive restructuring procedures. This paper assesses the interest of a procedure distinct from that for insolvent firms. It is based on the French experience, where a preventive procedure has coexisted with the more common restructuring procedure since 2006. The spatial and temporal heterogeneity of the Commercial Courts' decisions allows the identification of the causal impact of the conversion from the preventive procedure to the common one on the firm's survival chances. Using an (almost) exhaustive sample of preventive bankruptcy filings over 2010-2016, we show that conversion reduces the probability of firm survival by 50 p.p., which corresponds to indirect bankruptcy costs of around 20% of the firm assets. Our interpretation is that the low restructuring rate under the common bankruptcy procedure may alarm some of the firm's stakeholders, especially its customers. This in turn aggravates the firm's difficulties and reduces its chances of restructuring under the common procedure. We provide some empirical evidence to support this interpretation. A distinct preventive procedure helps prevent this spiral.

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“…Accordingly, a legal comparison of the national laws of member states is omitted. Even within the EU, national laws concerning bankruptcy vary, including the value of assets at the beginning of the procedure, the claims structure (such as seniority), and the legal environment of the proceedings [10]. Much of the same applies to restructuring.…”

Section: Introductionmentioning

confidence: 99%

Business Sustainability and Insolvency Proceedings—The EU Perspective

2020

J Sustain Res

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Business sustainability refers to economic sustainability performance that promotes profitability and to non-financial sustainability that may or may not create profitability. This paper concentrates on the relation between business sustainability and insolvency proceedings by asking what role business sustainability plays when choosing between restructuring (rescue) and liquidation proceedings. This choice is based on two tests: a viability test and a best interest of creditors test, the latter meaning that no dissenting creditor should be worse off in restructuring than in liquidation proceedings. In addition, the paper asks what role business sustainability plays when making the choice between restructuring and liquidation and what the consequences of this choice are for business sustainability elements. In addition, the paper asks who the stakeholders for business sustainability are in insolvency situations. The finding of the study is that creditor interest should be better balanced with non-financial sustainability, but with the requirement that creditors know the risks beforehand and are able to protect their interests, for example, through securities. Regarding environmental hazards, the paper suggests a "super responsibility" of bankruptcy estates to handle environmental problems, according to the precedent of the Canadian Supreme Court.

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Serving the creditors after insolvency filings: from value creation to value distribution

Cited by 13 publications

References 35 publications

Bankruptcy costs and the design of preventive restructuring procedures

Bankruptcy costs and the design of preventive restructuring procedures

Bankruptcy Costs and the Design of Preventive Restructuring Procedures

Business Sustainability and Insolvency Proceedings—The EU Perspective

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