Post-bankruptcy performance: A systematic literature review on the performance of U.S. firms after emerging from Chapter 11 bankruptcy

Abstract

The Chapter 11 process enables bankrupt firms to reorganize their business to return to profitability. This paper critically evaluates the literature on post-bankruptcy performance of U.S. firms that have emerged from Chapter 11. Analyzing 24 studies, we provide a comprehensive overview of the various post-bankruptcy performance metrics, the influencing factors, and the research methodologies. Post-bankruptcy performance varies significantly across firms, with average refiling rates in these studies between 7% and 39.3%, financial performance remaining below industry benchmarks, but stock market performance frequently meeting or exceeding market expectations. Key success factors include firm size, leverage reduction, industry conditions, and investor involvement, while factors such as CEO turnover and bankruptcy duration show mixed effects. Several research gaps remain, particularly regarding corporate governance, the effects of legal reforms, and the use of modern analytical techniques such as machine learning.

Keywords: post-bankruptcy performance, systematic review, Chapter 11, refiling

JEL Classification: G33