We present evidence on the efficiency of the resolution of financial distress in bankruptcy in The Netherlands. Direct costs average 16%, firm recovery 37% and bank debt recovery 80%. The direct costs are lower in larger firms and in firms with more bank debt. Costs increase with the time it takes to sell assets. Firm recovery is influenced by asset structure, capital structure and to a lesser extent Dutch legal variables. However, the opportunity to continue operations in bankruptcy is chosen by about half the firms and this has a positive effect on recoveries.

Additional Metadata
Persistent URL dx.doi.org/10.1007/s10657-008-9058-6, hdl.handle.net/1765/15932
Series ERIM Article Series (EAS)
Journal European Journal of Law and Economics
Citation
Couwenberg, O, & de Jong, A. (2008). Costs and recovery rates in the Dutch liquidation-based bankruptcy system. European Journal of Law and Economics, 26(2), 105–127. doi:10.1007/s10657-008-9058-6