The Costs of Bankruptcy Chapter 7 Cash Auctions vs. Chapter 11 Bargaining
71 Pages Posted: 3 Aug 2004
Date Written: March 15, 2004
Our paper explores a comprehensive sample of both small and large corporate bankruptcies in Arizona and New York from 1995-2001. We find that bankruptcy costs are very heterogeneous and sensitive to measurement method. Still, Chapter 7 liquidations seem more expensive in direct and equally expensive in indirect costs, than Chapter 11 bankruptcies. The paper provides a large number of further empirical regularities.
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