The Impact of Debtor-Friendly Reforms on the Performance of a Reorganization Procedure

52 Pages Posted: 19 Jan 2012

See all articles by Timothy C. G. Fisher

Timothy C. G. Fisher

University of Sydney, School of Economics

Jocelyn Martel

ESSEC Business School

Multiple version iconThere are 2 versions of this paper

Date Written: January, 18 2012

Abstract

Recent changes to Canadian bankruptcy law provide a natural experiment that we use to evaluate the impact of the international trend towards Chapter 11-style reorganization laws. Comparing random samples of reorganizing firms from before and after the law change show that changes to the law are associated with higher incentives for debtors to buy time prior to filing a proposal, a longer time in reorganization and a higher bankruptcy costs to assets ratio. The primary objective of the reform to attract more firms in reorganization has been met. The data also show that the system now attracts smaller and weaker firms although this has had very little impact on the acceptance rate and completion rate of reorganization plans.

Keywords: financial reorganization, bankruptcy law, economic efficiency

JEL Classification: G33, L11

Suggested Citation

Fisher, Timothy C. G. and Martel, Jocelyn, The Impact of Debtor-Friendly Reforms on the Performance of a Reorganization Procedure (January, 18 2012). Available at SSRN: https://ssrn.com/abstract=1987543 or http://dx.doi.org/10.2139/ssrn.1987543

Timothy C. G. Fisher

University of Sydney, School of Economics ( email )

Sydney
Australia

Jocelyn Martel (Contact Author)

ESSEC Business School ( email )

Avenue Bernard Hirsch B.P. 50105
Cergy-Pontoise, 95021
France
33 1 34 43 33 21 (Phone)

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