Acceso usuarios
Régis Blazy, Nicolae Stef
In the absence of well-developed financial markets, bankruptcy procedures provide useful mechanisms to ease and organize the capital transfers of distressed businesses. From an investor’s perspective, such court-supervised ways of solving financial distress are part of the attractiveness of the post-transition economies that eventually integrated the European Union. This article originally analyzes the content of bankruptcy files handled by the courts operating in three Eastern European countries: Hungary, Poland, and Romania. Our approach mostly focuses on the two fundamental issues that bankruptcy courts must solve when the question of repayments arises: (1) maximizing and (2) sharing the debtor’s value. We first find that the investors’ recovery power strongly depends on the local rules prevailing after bankruptcy filing (legal indexes) and on the type of procedure engaged (reorganization vs. liquidation). Second, total recoveries do not benefit from the presence of public claims suggesting some passivity from the state, in the context of post-transition. Conversely, junior creditors exert a positive influence on total recoveries despite their poor legal protection, which contrasts with secured creditors (confirming the bad incentives that collaterals may generate). In addition, as in Western Europe, the Eastern European bankruptcy systems provide stronger protection for private secured claims than for public claims.
