The paper discusses some major lessons to be learnt from the application of bankruptcy law in a post …-communist environment. Its focus is on East Central Europe because elsewhere bankruptcy law is of rather limited practical relevance. The … incentives and the selection of trustees turn out to be key issues if the loss of value typically occurring during bankruptcy …

monitoring is too costly, renegotiation leads to reorganization, which resembles actual bankruptcy practice. We calibrate the …-trivial choice between alternative bankruptcy procedures. Given limited commitment and asymmetric information, financial contracts … specify default, renegotiation and reorganization policies. Renegotiation entails a redistribution of social surplus, while …

insolvency system (liquidation and reorganization proceedings); and (4) effectiveness of the relevant institutional, regulatory …