? Financial Versus Social Efficiency Of Corporate Bankruptcy Law : The French Dilemma ??

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Executive Summary

The authors study the French dilemma associated with court administered resolution of corporate financial distress of firms, in which bankruptcy courts have to combine both social efficiency (maintaining employment) and ex post financial efficiency (determining the best issue for financial distress, proxies here by the global recovery rate). They discuss this dilemma empirically, using a large sample of decisions of French commercial courts concerning the future of bankrupt firms (reorganization, sale as a going concern or liquidation). Addressing this dilemma, they discuss the determinants of bankruptcy courts' selection between rival offers in sales as a going concern. Finally, they evaluate the financial cost of the French pro debtor system through the recovery rates of various claimants.

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