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

In this paper, the authors study the French dilemma associated to court administered resolution of corporate financial distresses: bankruptcy courts have to combine both social efficiency (maintaining employment) and ex post financial efficiency (determining the best issue for financial distress, proxied here by the global recovery rate). They empirically discuss the importance of this dilemma through a large sample of decisions of French commercial courts concerning the future of bankrupt firms (reorganization, sale as a going concern and liquidation). They test also this particularity when they discuss the determinants of bankruptcy courts' selection between rival offers in sales as a going concern.