The Costs of Bankruptcy Chapter 7 Cash Auctions vs. Chapter 11 Bargaining

Bris, Arturo; Welch, Ivo; Zhu, Ning

doi:10.2139/ssrn.556930

The Costs of Bankruptcy Chapter 7 Cash Auctions vs. Chapter 11 Bargaining

EFA 2004 Maastricht Meetings Paper No. 5155

71 Pages Posted: 3 Aug 2004

See all articles by Arturo Bris

Arturo Bris

IMD International; European Corporate Governance Institute (ECGI); Yale University - International Center for Finance

Ivo Welch

University of California, Los Angeles (UCLA); National Bureau of Economic Research (NBER)

Ning Zhu

China Academy of Financial Research (CAFR); Yale School of Management; University of California, Davis - Graduate School of Management

Date Written: March 15, 2004

Abstract

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.

Suggested Citation: Suggested Citation

Bris, Arturo and Welch, Ivo and Zhu, Ning, The Costs of Bankruptcy Chapter 7 Cash Auctions vs. Chapter 11 Bargaining (March 15, 2004). EFA 2004 Maastricht Meetings Paper No. 5155. Available at SSRN: https://ssrn.com/abstract=556930 or http://dx.doi.org/10.2139/ssrn.556930