Bankruptcy is the legal process whereby financially distressed firms, individuals, and occasionally governments resolve … their debts. The bankruptcy process for firms plays a central role in economics, because competition drives inefficient … corporate bankruptcy is to reduce the cost of default by having a government-sponsored procedure that resolves all debts …

A solid and sound bankruptcy system is a crucial pillar that is needed to sustain the stability of any competitive … payments rather than to go directly into a formal bankruptcy process. This paper considers small firms and sets up two systems … obtain the solution. We discuss the optimal strategy for distressed firms choosing between bankruptcy and a debt negotiation …

Reorganization Law, firms with higher management ownership are more likely to use legal rather than private reorganization. Since the … reorganization process under the law virtually eliminates the possibility of risk-shifting investment, creditors are more likely to …

alleviated by a suitably designed bankruptcy regime that facilitates debt restructuring. …