Abstract

http://ssrn.com/abstract=998531
 
 

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Court-Supervised Restructuring: Pre-Bankruptcy Dynamics, Debt Structure and Debt Rescheduling


Bart Leyman


Ghent University-Universiteit Gent - Faculty of Economics and Business Administration

Koen J. L. Schoors


Ghent University-Universiteit Gent - Centre for Russian International Socio-Political and Economic Studies (CERISE); Ghent University-Universiteit Gent - Department of General Economics

Peter Coussement


Ghent University - Financial Law Institute

April 2008


Abstract:     
We analyze the debt dynamics of corporations that reorganize under Belgian court-supervised restructuring, using a unique sample of small corporations. Small firms systematically accumulate unsecured trade credit and unpaid taxes and social contributions in the running up to bankruptcy-reorganization. First, small firms accumulate overdue taxes and social contributions, pushing the government administration in the unintended role of lender of last resort during the pre-bankruptcy period. Second, we find that the pecking order theory and specific trade credit theories predict the levels of trade credit accumulated during the pre-bankruptcy period very well. Our findings suggest that pre-bankruptcy dynamics strongly affect the debt structure at the moment of initiation of the procedure and in this way the ultimate outcome of the restructuring process.

Number of Pages in PDF File: 44

Keywords: court-supervised reorganization, bankruptcy, insolvency regulation

JEL Classification: G33, G38, K20

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Date posted: July 5, 2007 ; Last revised: April 22, 2008

Suggested Citation

Leyman, Bart and Schoors, Koen J. L. and Coussement, Peter, Court-Supervised Restructuring: Pre-Bankruptcy Dynamics, Debt Structure and Debt Rescheduling (April 2008). Available at SSRN: http://ssrn.com/abstract=998531 or http://dx.doi.org/10.2139/ssrn.998531

Contact Information

Bart Leyman (Contact Author)
Ghent University-Universiteit Gent - Faculty of Economics and Business Administration ( email )
Ghent, B-9000
Belgium
Koen J. L. Schoors
Ghent University-Universiteit Gent - Centre for Russian International Socio-Political and Economic Studies (CERISE) ( email )
Tweekerkenstraat 2
Ghent, 9000
Belgium
+32 9 264 34 78 (Phone)
+32 9 265 35 99 (Fax)
Ghent University-Universiteit Gent - Department of General Economics ( email )
Tweekerkenstraat 2
Ghent, 9000
Belgium
+32 9 264 34 78 (Phone)
+32 9 264 35 99 (Fax)
Peter Coussement
Ghent University - Financial Law Institute ( email )
Universiteitstraat 4
Ghent, B-9000
Belgium
+322686856 (Phone)
+3292686855 (Fax)
HOME PAGE: http://www.law.ugent.be/fli
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