Bankruptcy Auctions: Costs, Debt Recovery, and Firm Survival

Posted: 11 Jul 1999

See all articles by Karin S. Thorburn

Karin S. Thorburn

Norwegian School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Date Written: April 1999

Abstract

This paper provides large-sample evidence on the Swedish auction bankruptcy system. Compared to U.S. Chapter 11, bankruptcy auctions are substantially quicker and have lower costs. Three-quarters of the firms survive the auction as going concern, which is similar to Chapter 11 survival rates. Also, based on market values, auctions produce total debt recovery rates that are comparable to recovery rates in Chapter 11 reorganizations. The cash settlement enforces adherence to absolute priority rules. Overall, the evidence provides little support for the view that auction bankruptcy causes managers to delay filing relative to what happens under the U.S. reorganization code.

JEL Classification: G3

Suggested Citation

Thorburn, Karin S., Bankruptcy Auctions: Costs, Debt Recovery, and Firm Survival (April 1999). Available at SSRN: https://ssrn.com/abstract=163948

Karin S. Thorburn (Contact Author)

Norwegian School of Economics ( email )

Helleveien 30
N-5045 Bergen
Norway
+4755959283 (Phone)

HOME PAGE: http://www.nhh.no/cv/thorburn

Centre for Economic Policy Research (CEPR)

London
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Register to save articles to
your library

Register

Paper statistics

Abstract Views
2,569
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information