Debt Recovery in Firm Liquidations: Do Liquidation Trustees Matter?

35 Pages Posted: 28 Sep 2016

See all articles by Jaka Cepec

Jaka Cepec

University of Ljubljana - Faculty of Economics

Peter Grajzl

Washington and Lee University - Department of Economics; CESifo

Katarina Zajc

University of Ljubljana - Faculty of Law

Multiple version iconThere are 2 versions of this paper

Date Written: August 09, 2016

Abstract

Insolvency systems play a crucial role in protection of creditor rights, yet micro-level empirical evidence on the functioning of insolvency regimes worldwide is sparse. We investigate whether creditors’ recovery of outstanding claims, a measure of ex-post efficiency of an insolvency regime, depends on the characteristics of the trustee delegated the administration of the liquidation proceedings. To this end, we draw on a novel dataset of firm liquidations from Slovenia and exploit courts’ de facto random assignment of firm liquidation cases to licensed liquidation trustees. Using a wide range of specifications and controls, we find that a subset of trustee characteristics indeed matters for debt recovery. Thus, ex-post efficiency of an insolvency regime depends not only on its formal rules and procedures, but also on who implements them in practice.

Keywords: insolvency, firm liquidations, debt recovery, liquidation trustees, Slovenia

JEL Classification: G330, K220, P370

Suggested Citation

Cepec, Jaka and Grajzl, Peter and Zajc, Katarina, Debt Recovery in Firm Liquidations: Do Liquidation Trustees Matter? (August 09, 2016). CESifo Working Paper Series No. 6034. Available at SSRN: https://ssrn.com/abstract=2844638

Jaka Cepec

University of Ljubljana - Faculty of Economics ( email )

Peter Grajzl (Contact Author)

Washington and Lee University - Department of Economics ( email )

Lexington, VA 24450
United States

HOME PAGE: http://home.wlu.edu/~grajzlp/

CESifo ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Katarina Zajc

University of Ljubljana - Faculty of Law ( email )

Dunajska 104
1000 Ljubljana, 1000
Slovenia

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