Four essays on the bankruptcy mechanism : legal and economic aspects.

Summary The four chapters of this thesis analyze the way in which the different aspects of bankruptcy law influence the economic results of a bankruptcy proceeding, in particular the degree of debt recovery by creditors. The first chapter shows that bankruptcy laws have different creditor voting requirements depending on their legal origin such as: English origin, French origin, German origin and Nordic origin. The second chapter argues that the national use of reorganization proceedings is favored by less strict acceptance processes. The third chapter shows that Eastern European bankruptcy systems offer stronger protection of secured claims than in the case of public claims. A higher concentration of debt decreases the recovery rates in the case of liquidation proceedings. The estimates confirm the existence of two interaction effects between the classes of Eastern European creditors: the spillover effect and the rivalry effect. The last chapter proposes a theoretical model that predicts that debtors have strong incentives to propose reorganization plans to creditors with suboptimal cost sharing regardless of the orientation of the bankruptcy legal environment including a pro-creditor orientation or a pro-debtor orientation.