Abstract
European countries have amended their bankruptcy statutes in the past decades to increase the likelihood of a company’s continuation in bankruptcy. Liquidation procedures are ill suited to realize the full value of the company as a going concern. An infusion of new finance raises company valuation and makes continuation through reorganization more likely. Reorganization preserves value, if general creditors as the main beneficiaries of reorganization play a crucial role in reorganization proceedings. Legal origins of national bankruptcy legislations are less important in explaining the incidence of reorganization than national attitudes towards failure and the prevalence of equity over debt finance.
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