Can Bankruptcy Codes Create Value? - Evidence from Creditors’ Recoveries in France, Germany, and the United Kingdom

48 Pages Posted: 13 Sep 2012 Last revised: 22 Jan 2013

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)

Multiple version iconThere are 2 versions of this paper

Date Written: July 17, 2012

Abstract

This paper provides evidence on the value creation of bankruptcy procedures that belong to different legal systems (French civil law, German civil law, and British common law). Using a sample of 900 hand-collected corporate bankruptcy files, we find that France and Germany show quite similar overall recovery rates that are greater than in the United Kingdom. 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 United Kingdom, while they remain greater in Germany. We 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 & finance, bankruptcy law, recovery rates

JEL Classification: G33, K22

Suggested Citation

Blazy, Régis and Petey, Joël and Weill, Laurent, Can Bankruptcy Codes Create Value? - Evidence from Creditors’ Recoveries in France, Germany, and the United Kingdom (July 17, 2012). Midwest Finance Association 2013 Annual Meeting Paper, Available at SSRN: https://ssrn.com/abstract=2145849 or http://dx.doi.org/10.2139/ssrn.2145849

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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