NDLI: The uneasy case for rehabilitating small firms under the 1997-reorganization law in Belgium: evidence from reorganization plans

Content Provider	Springer Nature Link
Author	Leyman, Bart
Copyright Year	2010
Abstract	Using a sample of small Belgian firms that reorganized under the 1997 Law on Judicial Composition, I empirically review the law’s effectiveness to rehabilitate distressed debtors. The econometric findings show that firms with less pre-bankruptcy operational losses and a better cash position are more likely to successfully execute their reorganization plan and that certain debt restructuring measures can contribute to firm rescue. Despite these positive findings, many firms still failed to reorganise under the 1997-reorganization law, which resulted in constant criticism on its effectiveness leading up to its recent replacement in 2009. My data also shows that within the former reorganization procedure the Belgian debtor was faced with high debt instalment payments compared to international practice and that successful plan execution relied too much on the uncertain realization of the operational cash flow projections. In discussing the legal framework of the new Law on Corporate Continuity enacted in 2009—replacing the 1997-law—I argue that this new law is a more effective legislation to save distressed businesses.
Starting Page	533
Ending Page	560
Page Count	28
File Format	PDF
ISSN	09291261
Journal	European Journal of Law and Economics
Volume Number	34
Issue Number	3
e-ISSN	15729990
Language	English
Publisher	Springer US
Publisher Date	2010-12-10
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Court-supervised reorganization Bankruptcy Insolvency regulation Reorganization plan Commercial Law Law and Economics Public Finance & Economics European Integration
Content Type	Text
Resource Type	Article
Subject	Business and International Management Law Economics and Econometrics

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