as a reduction in bankruptcy-related costs. This trend raises the question as to what drives the frequency with which … default decreases with bankruptcy costs and it increases with the frequency of strategic default – that is, default by firms … which could have honored their obligations. When bankruptcy costs decrease, creditors obtain higher recovery rates out …

This paper examines bankruptcy costs using market prices of equity and put options during the financial crisis. Our … approach avoids the downward selection bias and the upward bias when using the tradeoff theory to estimate bankruptcy costs …. While the average bankruptcy cost is about 20%, we find wide variation across and within industries. Costs are related …

value of assets. The costs vary from 14.7% for bond renegotiations to 30.5% for bankruptcies, and are substantially higher …