Debt Recovery in Firm Liquidations: Do Liquidation Trustees Matter?
35 Pages Posted: 28 Sep 2016
Date Written: August 09, 2016
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: Suggested Citation