Can Bankruptcy Codes Create Value? Evidence from Creditors’ Recoveries Infrance, Germany, and the UK

41 Pages Posted: 17 Jul 2012

See all articles by Régis Blazy

Régis Blazy

University of Strasbourg

Joël Petey

University of Strasbourg

Laurent Weill

University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie)

Date Written: February 15, 2011

Abstract

This paper provides new evidence on the value creation of bankruptcy procedures that belong to different legal systems (French civil law, German civil law, and British common law). To do so, we assess to which extent the debtor’s value can be preserved under bankruptcy by analyzing the recovery rates in France, Germany, and the United Kingdom. We use a unique sample of 900 hand-collected corporate bankruptcy files.We find that France and Germany show quite similar overall recovery rates which are greater than in the UK. However,when controlling for the quality of assets and for the structure of claims, we observe that recovery rates are not significantly different between France and the UK, while they remain greater in Germany. We further show that there are significant differences in terms of recoveries between procedures within countries. Finally, we observe that the recovery rates of the different classes of claimants also significantly differ across countries and procedures. These results show that bankruptcy codes are not equivalent in the way they manage and realize the debtor’s assets and protect the various claimants.

Keywords: Law and Finance, Bankruptcy Law, Recovery rates

JEL Classification: G33

Suggested Citation

Blazy, Régis and Petey, Joël and Weill, Laurent, Can Bankruptcy Codes Create Value? Evidence from Creditors’ Recoveries Infrance, Germany, and the UK (February 15, 2011). Available at SSRN: https://ssrn.com/abstract=2109404 or http://dx.doi.org/10.2139/ssrn.2109404

Régis Blazy (Contact Author)

University of Strasbourg ( email )

61, avenue de la foret noire
Strasbourg, Alsace 3000
France

Joël Petey

University of Strasbourg ( email )

61, avenue de la foret noire
Strasbourg, Alsace 3000
France

Laurent Weill

University of Strasbourg - LaRGE Research Center (Laboratoire de Recherche en Gestion et Economie) ( email )

61 Avenue de la Forêt Noire
F-67085 Strasbourg Cedex
France

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