IDEAS home Printed from https://ideas.repec.org/a/eee/irlaec/v66y2021ics0144818821000089.html
   My bibliography  Save this article

The CV effect: To what extent does the chance to reorganize depend on a bankruptcy judge’s profile?

Author

Listed:
  • Blazy, Régis
  • Esquerré, Stéphane

Abstract

This study explores the link between the individual profiles of French commercial judges and the bankruptcy cases they supervised between 2006 and 2012. A “Curriculum Vitae effect” prevails: the chance to reorganize after filing for bankruptcy varies with the composition of the chambers. We also confirm the existence of a limited (but not marginal) appointment bias, suggesting that bankruptcy cases are not fully randomized across judges. Several variables accounting for the judges’ profiles are found to be significant. The presence of female judges increases the chances of a successful plan (for continuation). We find a similar influence of the judges’ managerial skills and of the highest academic profiles. However, a mismatch between the judges’ profiles (mostly oriented toward big businesses) and bankrupt firms (closer to small and medium-sized enterprises) undermines the probability of reorganizing. We also focus on the two main filters for reorganization: i) the decision to open an observation period, and ii) the court supervision of such a period. Our findings provide normative recommendations to better align lay justice with litigants’ needs. The results from France can be extended to other mixed bankruptcy systems.

Suggested Citation

  • Blazy, Régis & Esquerré, Stéphane, 2021. "The CV effect: To what extent does the chance to reorganize depend on a bankruptcy judge’s profile?," International Review of Law and Economics, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:irlaec:v:66:y:2021:i:c:s0144818821000089
    DOI: 10.1016/j.irle.2021.105984
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0144818821000089
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.irle.2021.105984?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Senbet, Lemma W. & Wang, Tracy Yue, 2012. "Corporate Financial Distress and Bankruptcy: A Survey," Foundations and Trends(R) in Finance, now publishers, vol. 5(4), pages 243-335, August.
    2. Lambert-Mogiliansky, Ariane & Sonin, Konstantin & Zhuravskaya, Ekaterina, 2007. "Are Russian commercial courts biased? Evidence from a bankruptcy law transplant," Journal of Comparative Economics, Elsevier, vol. 35(2), pages 254-277, June.
    3. repec:dau:papers:123456789/1711 is not listed on IDEAS
    4. Maria Brouwer, 2006. "Reorganization in US and European Bankruptcy law," European Journal of Law and Economics, Springer, vol. 22(1), pages 5-20, July.
    5. Arturo Bris & Ivo Welch & Ning Zhu, 2006. "The Costs of Bankruptcy: Chapter 7 Liquidation versus Chapter 11 Reorganization," Journal of Finance, American Finance Association, vol. 61(3), pages 1253-1303, June.
    6. Chien-An Wang, 2012. "Determinants of the Choice of Formal Bankruptcy Procedure: An International Comparison of Reorganization and Liquidation," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(2), pages 4-28, March.
    7. Bergstrom, Clas & Eisenberg, Theodore & Sundgren, Stefan, 2002. "Secured debt and the likelihood of reorganization," International Review of Law and Economics, Elsevier, vol. 21(4), pages 359-372, May.
    8. Julian R. Franks & Kjell G. Nyborg & Walter N. Torous, 1996. "A Comparison of UK, US and German Insolvency Codes," Financial Management, Financial Management Association, vol. 25(3), Fall.
    9. Fisher, Timothy C G & Martel, Jocelyn, 1995. "The Creditors' Financial Reorganization Decision: New Evidence from Canadian Data," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 11(1), pages 112-126, April.
    10. Couwenberg, Oscar, 2001. "Survival rates in bankruptcy systems : overlooking the evidence," Research Report 01E15, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    11. Nicolae Stef, 2017. "Voting Rules in Bankruptcy Law," Post-Print hal-01549783, HAL.
    12. Timothy C.G. Fisher & Jocelyn Martel, 2004. "Empirical Estimates of Filtering Failure in Court‐Supervised Reorganization," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 1(1), pages 143-164, March.
    13. White, Michelle J, 1989. "The Corporate Bankruptcy Decision," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 129-151, Spring.
    14. Blazy, Régis & Chopard, Bertrand & Fimayer, Agnès & Guigou, Jean-Daniel, 2011. "Employment preservation vs. creditors' repayment under bankruptcy law: The French dilemma?," International Review of Law and Economics, Elsevier, vol. 31(2), pages 126-141, June.
    15. Régis Blazy & Joël Petey & Laurent Weill, 2018. "Serving the creditors after insolvency filings: from value creation to value distribution," European Journal of Law and Economics, Springer, vol. 45(2), pages 331-375, April.
    16. P. M. T. Broersen, 1986. "Subset Regression with Stepwise Directed Search," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 35(2), pages 168-177, June.
    17. Edward R. Morrison, 2007. "Bankruptcy Decision Making: An Empirical Study of Continuation Bias in Small-Business Bankruptcies," Journal of Law and Economics, University of Chicago Press, vol. 50(2), pages 381-419.
    18. Régis Blazy & Bertrand Chopard, 2012. "(Un)secured debt and the likelihood of court-supervised reorganization," European Journal of Law and Economics, Springer, vol. 34(1), pages 45-61, August.
    19. Soo Chew & Richard Ebstein & Songfa Zhong, 2012. "Ambiguity aversion and familiarity bias: Evidence from behavioral and gene association studies," Journal of Risk and Uncertainty, Springer, vol. 44(1), pages 1-18, February.
    20. Luc Marco & Michel Rainelli, 1986. "« Les disparitions de firmes industrielles en France : un modèle économétrique »," Revue d'Économie Industrielle, Programme National Persée, vol. 36(1), pages 1-13.
    21. repec:dgr:rugsom:01e15 is not listed on IDEAS
    22. Clas Wihlborg & Shubhashis Gangopadhyay, 2001. "Infrastructure Requirements in the Area of Bankruptcy Law," Center for Financial Institutions Working Papers 01-09, Wharton School Center for Financial Institutions, University of Pennsylvania.
    23. Zorn, Christopher, 2005. "A Solution to Separation in Binary Response Models," Political Analysis, Cambridge University Press, vol. 13(2), pages 157-170, April.
    24. Lynn M. LoPucki & Joseph W. Doherty, 2004. "The Determinants of Professional Fees in Large Bankruptcy Reorganization Cases," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 1(1), pages 111-141, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Annabi, Amira & Breton, Michèle & François, Pascal, 2021. "Could Chapter 11 redeem itself? Wealth and welfare effects of the redemption option," International Review of Law and Economics, Elsevier, vol. 67(C).
    2. Stef, Nicolae & Ben Jabeur, Sami & Scherer, Robert F., 2022. "Time to resolve insolvency and political elections," International Review of Law and Economics, Elsevier, vol. 72(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Régis BLAZY & Stéphane ESQUERRE, 2019. "The CV effect: How far do the chances to reorganize depend on the bankruptcy judges’ profile?," Working Papers of LaRGE Research Center 2019-07, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    2. Régis Blazy & Joël Petey & Laurent Weill, 2018. "Serving the creditors after insolvency filings: from value creation to value distribution," European Journal of Law and Economics, Springer, vol. 45(2), pages 331-375, April.
    3. Amel Alic & Habibović Sedin & Haris Cerić, 2024. "Interdisciplinary View into Optimism and Pessimism in Emic Perspective," European Journal of Interdisciplinary Studies Articles, Revistia Research and Publishing, vol. 4.
    4. Régis Blazy & Nirjhar Nigam, 2019. "Corporate insolvency procedures in England: the uneasy case for liquidations," European Journal of Law and Economics, Springer, vol. 47(1), pages 89-123, February.
    5. Dewaelheyns, Nico & Van Hulle, Cynthia, 2009. "Filtering speed in a Continental European reorganization procedure," International Review of Law and Economics, Elsevier, vol. 29(4), pages 375-387, December.
    6. Nicolae Stef, 2023. "Bankruptcy voting process and corporate reorganization," Bulletin of Economic Research, Wiley Blackwell, vol. 75(2), pages 508-524, April.
    7. Jaka Cepec & Peter Grajzl & Katarina Zajc, 2016. "Debt Recovery in Firm Liquidations: Do Liquidation Trustees Matter?," CESifo Working Paper Series 6034, CESifo.
    8. B. Leyman & K. Schoors & P. Coussement, 2008. "The Role of Firm Viability, Creditor Behavior and Judicial Discretion in the Failure of Distressed Firms under Courtsupervised Restructuring: Evidence from Belgium," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 08/509, Ghent University, Faculty of Economics and Business Administration.
    9. Jaka Cepec & Peter Grajzl & Katarina Zajc, 2016. "Debt Recovery in Firm Liquidations: Do Liquidation Trustees Matter?," Quaderni del Dipartimento di Economia, Finanza e Statistica 24/2016, Università di Perugia, Dipartimento Economia.
    10. Bart Leyman, 2012. "The uneasy case for rehabilitating small firms under the 1997-reorganization law in Belgium: evidence from reorganization plans," European Journal of Law and Economics, Springer, vol. 34(3), pages 533-560, December.
    11. Jaka Cepec & Peter Grajzl & Barbara Mörec, 2024. "The impact of institutionalized representation: creditors' committees and the resolution of corporate liquidation bankruptcies," European Journal of Law and Economics, Springer, vol. 58(3), pages 397-425, December.
    12. Régis Blazy & Nicolae Stef, 2020. "Bankruptcy procedures in the post-transition economies," European Journal of Law and Economics, Springer, vol. 50(1), pages 7-64, August.
    13. Blazy, Régis & Letaief, Aziza, 2017. "When secured and unsecured creditors recover the same: The emblematic case of the Tunisian corporate bankruptcies," Emerging Markets Review, Elsevier, vol. 30(C), pages 19-41.
    14. Cepec, Jaka & Grajzl, Peter, 2020. "Debt-to-equity conversion in bankruptcy reorganization and post-bankruptcy firm survival," International Review of Law and Economics, Elsevier, vol. 61(C).
    15. Blazy, Régis & Chopard, Bertrand & Fimayer, Agnès & Guigou, Jean-Daniel, 2011. "Employment preservation vs. creditors' repayment under bankruptcy law: The French dilemma?," International Review of Law and Economics, Elsevier, vol. 31(2), pages 126-141, June.
    16. Blazy, Régis & Chopard, Bertrand & Nigam, Nirjhar, 2013. "Building legal indexes to explain recovery rates: An analysis of the French and English bankruptcy codes," Journal of Banking & Finance, Elsevier, vol. 37(6), pages 1936-1959.
    17. Srhoj, Stjepan & Kovač, Dejan & Shapiro, Jacob N. & Filer, Randall K., 2023. "The impact of delay: Evidence from formal out-of-court restructuring," Journal of Corporate Finance, Elsevier, vol. 78(C).
    18. Marianna Succurro, 2012. "Bankruptcy systems and economic performance across countries: some empirical evidence," European Journal of Law and Economics, Springer, vol. 33(1), pages 101-126, February.
    19. Régis Blazy & Bertrand Chopard & Agnès Fimayer & Jean-Daniel Guigou, 2007. "Financial versus Social Efficiency of Corporate Bankruptcy Law: the French Dilemma?," LSF Research Working Paper Series 07-02, Luxembourg School of Finance, University of Luxembourg.
    20. Leyman, Bart & Schoors, Koen J.L. & Coussement, Peter, 2011. "Does court-supervised reorganization work? Evidence from post-confirmation firm failure," International Review of Law and Economics, Elsevier, vol. 31(3), pages 149-168, September.

    More about this item

    Keywords

    Bankruptcy; Lay justice; Judges; Court; CV; Bankrupt firms; Reorganization; Liquidation;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:irlaec:v:66:y:2021:i:c:s0144818821000089. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/irle .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.