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Costs and Recovery Rates in the Dutch Liquidation-Based Bankruptcy SystemOscar CouwenbergUniversity of Groningen - Faculty of Law - Department of Law and Economics Abe De JongErasmus University - Rotterdam School of Management July 10, 2008 European Journal of Law and Economics, Vol. 26, pp. 105-127, 2008 Abstract: We present evidence on the efficiency of the resolution of financial distress in bankruptcy in The Netherlands. Direct costs average 16%, firm recovery 37% and bank debt recovery 80%. The direct costs are lower in larger firms and in firms with more bank debt. Costs increase with the time it takes to sell assets. Firm recovery is influenced by asset structure, capital structure and to a lesser extent Dutch legal variables. However, the opportunity to continue operations in bankruptcy is chosen by about half the firms and this has a positive effect on recoveries.
Keywords: Bankruptcy, Liquidation, Direct costs, Recovery rates JEL Classification: G33, K22 Accepted Paper SeriesDate posted: October 2, 2008Suggested CitationContact Information
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