the case of distress, a bankruptcy regime is established which allows reviving viable but financially distressed … businesses and to liquidate structurally distressed businesses in an orderly asset distribution procedure. Bankruptcy is ex ante … ex post outcomes. Bankruptcy has, however, been abolished under socialism leading to systems of soft budget constraints …

). The HDC can order an immediate repayment or grant a debt suspension. Exploiting the random assignment of bankruptcy … importance of regulation of credit distribution to avoid both entering into bankruptcy and re-filing for bankruptcy. …