The Costs of Bankruptcy: Chapter 7 Liquidation versus Chapter 11 Reorganization

By Arturo Bris, Ivo Welch, Ning Zhu. 2006

649 citations recorded by the source corpus.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/a11fd7c2c0d8af2c72d1ba0c3fb30797d35e2fce

How researchers see this paper

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In Accounting

1. Yasuhiro Yamakawa
2. Chen Lin
3. Mike W. Peng
4. Seung-Hyun Lee
5. Raluca A. Roman
6. H. Zou
7. J. Mulherin
8. Audra L. Boone

In Finance

1. Raluca A. Roman
2. Chen Lin
3. R. Jankowitsch
4. Allen N. Berger
5. Florian Nagler
6. Mike W. Peng
7. Alexei V. Ovtchinnikov
8. Marti G. Subrahmanyam

Citations in the corpus

• The Determinants of Recovery Rates in the US Corporate Bond Market (2014, methodology): “, Jarrow and Turnbull (1995), Duffie and Singleton (1997), Lando (1998) and Madan and Unal (1998)). Rather, these models allow separate, explicit assumptions to be made regarding the dynamics of both the probability of default and the recovery rate. Although, in principle, a complex dependence struc”
• The Real and Financial Implications of Corporate Hedging (2011, positive): “2These costs include direct bankruptcy costs (e.g., lawyers charges and administrative fees) as well as indirect costs due to the potential loss of customers, suppliers, and growth opportunities (Bris et al. (2006) and Purnanandam (2008)).”
• Bankruptcy law and bank financing (2016, neutral): “By A2, y1(σ) + αy2 is larger than K, thus it always exists a value of the per-period repayments, Rt(σ, 1), such that the break-even condition in (4), the feasibility constraints, and (8) hold true.”
• Judicial Discretion in Corporate Bankruptcy (2010, background): “As we shall discuss in Section 6, the supply side of our model is consistent with a wealth of evidence on the variation of several bankruptcy outcomes across U.S. courts (e.g. Chang and Schoar 2006, Bris, Welch, and Zhu 2006).”
• Do Auctions Induce a Winner's Curse? New Evidence from the Corporate Takeover Market (2008, methodology): “Our first method of dealing with selection is a two-step treatment method that has been used in related corporate finance applications such as Bris, Welch, and Zhu (2006) and Campa and Kedia (2002).”
• Did Saving Wall Street Really Save Main Street? The Real Effects of TARP on Local Economic Conditions (2015, positive): “We also examine bankruptcies for each state because bankruptcies can be costly (e.g., Altman (1984), Hotchkiss (1995), Weiss (1990), Wruck (1990), Weiss and Wruck (1998), and Bris, Welch, and Zhu (2006)) and may reflect resource misallocation in the local markets (Meyer and Pifer (1970)).”
• The importance of project finance for renewable energy projects (2018, background): “Financial theory implies that in perfect markets, companies should not be concerned about idiosyncratic bankruptcy risk as portfolios are diversified at the shareholder level (Sharpe, 1964) – in real markets, though, bankruptcies come with irreversible costs (Bris et al., 2006) and managers are risk”
• Institutions, ownership structures, and distress resolution in China☆ (2013, background): “However, under strong creditor protection, distressed companies with promise might be liquidated prematurely and their going-concern value destroyed (Bris et al., 2006).”
• Leverage and corporate performance: International evidence (2012, background): “instance, Bris et al. (2006) document direct costs of on average 8.”