Bankruptcy Filings Research Articles

The impact of paid sick leave laws on consumer and business bankruptcies

AbstractThis paper examines how missed income due to illness impacts household fragility. Specifically, it shows that paid sick leave laws, which provide households insurance against illness‐related income shocks, reduce consumer bankruptcy. Using a panel dataset at the county‐quarter level, this paper exploits the geographic and temporal variation in the adoption of paid sick leave laws to implement a difference‐in‐differences and event study analysis. It finds that paid sick leave laws reduce consumer bankruptcy filings by approximately 11%; this effect is seen within three quarters of the law's implementation and remains constant in magnitude and significance thereafter. As paid sick leave laws may come at a cost to businesses, this paper also examines the impact of such laws on business bankruptcy filings—it shows that paid sick leave laws have little to no impact on business bankruptcy filings.

Factors that Lead Malaysians to File for Personal Bankruptcy

A formal legal statement that one cannot fully repay all of one's debts is required to declare bankruptcy. Since 2000, the number of personal bankruptcies that occur annually in Malaysia has been greater than 10,000. The COVID-19 outbreak that began in early 2020 had a significant negative impact on the economy and the healthcare system as if things were not already terrible enough. As a result, the primary objective of this study was to investigate the statistics covering the period from 1990 to 2020 to determine the factors that lead to personal bankruptcies in Malaysia. In addition, it examined whether or not there was a connection between individual bankruptcies in Malaysia and the country's lending rate, the percentage of loans that were considered to be non-performing, and the unemployment rate. A multivariate regression model was utilized to determine the significance of the relationship between the dependent and independent variables. It was discovered that individual bankruptcies had a significant and inversely proportional relationship with credit and unemployment rates. On the other hand, there was a significant connection between personal bankruptcies and the presence of non-performing loans. Future researchers are strongly encouraged to gather data daily, quarterly, or monthly, incorporate more independent factors in the drivers of personal bankruptcy, and expand their investigations to other countries to obtain more accurate and credible conclusions.

Itinerant merchants: between networks of migrants and survival strategy (16th–20th)

ABSTRACT In dictionaries as well as in literature, the pedlar is an ambiguous figure. Urban sources testify to the desire of the urban authorities and sedentary merchants to exclude them. A few bankruptcy files do, however, make it possible to document failures as well as to provide information on the tours and the credit necessary to exercise the trade. However, to overcome the purely urban viewpoint, one must leave the town behind and concentrate instead upon the home villages and its notarial archives in order to link individual departures to the social framework to which they belonged and to understand the organisation of these networks of migrants. However, the municipal archives on poverty, on markets, as well as the archives of the police, justice and guilds allow us to enter into certain economic practices of the most destitute. In the first part, the essay describes the organisation of migrant networks and their evolution between the sixteenth and twentieth centuries. In the second part, it analyses urban peddling, which is the economic resource of the poorest people, particularly women, and the battles waged against them by the elites and established merchants in order to keep them off the streets.

Reading Chinese Australian enterprise through insolvency and bankruptcy files, 1857–1926

Historical scholarship on Chinese diasporic enterprise has largely rejected culturalist paradigms in favour of structuralist ones, but the question of culture remains contentious. It has also been addressed primarily via case studies of Southeast Asia’s largest and most prominent Chinese firms. Through examining the collection of 101 Chinese insolvency and bankruptcy files created in Sydney between 1857 and 1926, this paper presents an unseen view of Chinese diasporic enterprise. It argues that Chinese entrepreneurs employed strategies common across business in Australia, coined and used distinctive methods of their own and applied cultural resources imported from China within complex and dynamic Chinese Australian entrepreneurial approaches. That these were so nuanced, I suggest, reveals the considerable scope for balancing different practices in Chinese business overseas that existed beyond the most familiar examples.

Financial Costs of Judicial Inexperience: Evidence From Corporate Bankruptcies

AbstractExploiting the random assignment of judges to corporate bankruptcy filings, we estimate financial costs of judicial inexperience. Despite new judges’ prior legal experience, formal education, and rigorous hiring process, their public Chapter 11 cases spend 19% more time in bankruptcy, realize 31% higher legal and professional fees, and 21% lower creditor recovery rates. Examining possible mechanisms, we find that new judges take longer to rule on motions and cases assigned to these judges file more plans of reorganization. Conservative estimates suggest that minor policy adjustments could increase creditor recoveries by approximately $16.8 billion for the public firms in our sample.

Juridical Study on Cooperative Legal Entity Bankruptcy Submissions by Its Member

The Covid-19 pandemic resulted in several cooperatives failing to pay and made many of their members file bankruptcy petitions against their cooperatives, this condition then caused opposition from several parties. Therefore, this paper aims to examine the issue of filing for bankruptcy of a cooperative legal entity by its member with questions: 1) how is the legal construction of Indonesian cooperative bankruptcy, 2) whether the permissibility of filing a bankruptcy petition against cooperatives by its member is in line with the characteristics of Indonesian cooperative legal entities. The method used is normative juridical research. The results show 1) Law no. 37 of 2004 and Law no. 25 of 1992 do not regulate restrictions on legal subjects who can file for bankruptcy against cooperatives. Therefore, the cooperative itself, members of the cooperative, and other creditors have the right to file for bankruptcy against the cooperative. 2) The filing of a petition for bankruptcy of a cooperative by its member (who is a creditor) is not in accordance with the characteristics of Indonesian cooperatives, considering that each of cooperative members is the owners of the cooperative itself and the main basis for the operation of cooperatives is the principles of kinship and democracy. Thus, it is concluded that the filing of a petition for bankruptcy of a cooperative by its member (who has a position as a creditor) is valid but is not in accordance with the characteristics of the legal entity of Indonesian cooperatives. Therefore, the government is advised to review the terms and restrictions on legal subjects who can petition for bankruptcy against cooperatives.

ARRANGEMENT OF BANKRUPTCY DEBT REPAYMENT TOWARD EMPLEYEES IN INDONESIA AND GERMANY

Employees have specific rights in the settlement of bankrupt debts under Indonesian Bankruptcy Law, but they must compete with other privileged creditors, such as tax authorities, insurance holders, and those owed bankruptcy fees, which often affects their priority status. This study investigates the bankruptcy filing mechanisms for legal entities and the relative position of employees in debt repayment, comparing the Indonesian and German legal systems. Employing normative legal research methods and analyzing secondary data, the study outlines that both systems are structured into three stages: registration, trial, and implementation of the bankruptcy decision. In Indonesia, while employees receive priority for wage payments, other rights are not prioritized, making them non-preferential. Conversely, Germany’s system includes the “Insolvenzgeld” mechanism, which guarantees payment of three months' wages during the preliminary insolvency stage, and prioritizes employee claims under social plans over other creditors. Claims not covered by Insolvenzgeld are settled after higher-priority creditors have been fully compensated.

Analisis Yuridis Permohonan Pailit PT. Bina Karya Sarana Oleh Kreditur (Studi Putusan No. 6/Pdt. Sus-Pailit/2018/PN.Niaga.Medan)

An application for bankruptcy is usually made on the grounds that neither he nor the business activities he carries out are able to carry out all of his obligations. In this case, the factors that cause bankruptcy are because the debtor is unable to pay his debts to one or more creditors whose due date for payment of debt repayments has fallen. The debtor's inability occurs because his debts are greater than his assets. This research uses a normative juridical law research method, the nature of the research is descriptive analytical with a literature study approach and a field study at the Medan Niaga District Court, then analyzed qualitatively. The responsibility of PT. Bina Karya Sarana against creditors who apply for bankruptcy is to pay all debts that exist on creditors with all debtor assets by law as collateral for debtor debts, all debtor assets are in general confiscation from the time the bankruptcy decision is pronounced. The judge's consideration in giving the bankruptcy decision on the decision no. 6/Pdt.Sus-Pailit/2018/ PN Niaga Medan, based on Law No. 37 of 2004 by examining the evidence provided by the applicant, and examining all legal facts that occurred during the trial process and, looking at the related elements Related articles contained in the lawsuit regarding the filing of bankruptcy in a limited liability company.

Global Crises and Corporate Reorganisation Methods

Despite many regulatory changes there are still no sound reorganisation possibilities for financially distressed companies in Hungary. The current crisis of 2020 due to the pandemic is going to trigger mass liquidations especially there where the bankruptcy rules are ineffective. There is no efficient risk and resource allocation if there is no reasoning and the financial and economic criteria necessary for a proper bankruptcy management are not taken into consideration in the reorganisation procedure. This article is based on primary research conducted in 2014 and a further analysis of the problem published in the Eurasian Studies in Business and Economics in 2020 (Pálinkó and Pétervári, 2020). The conclusion is that the financial variables are seemingly irrelevant in decision-making. The bankruptcy procedure has become a useful tactic for the owner-management to keep their position and protected status for as long as possible even at the expense of the divergent creditors. There is a genuine need for a different model in Hungary, one in which financially rational decisions are not dysfunctional. We have found that time is the most important factor here. It is therefore suggested that the rules should be designed so that the companies be motivated to file for bankruptcy in time. This design is the automated mandatory auction bankruptcy procedure or its pre-pack version.

TPC files for bankruptcy

After a rough few years, TPC Group has filed for Chapter 11 bankruptcy protection. The company, which processes crude C4 streams into butene and butadiene and makes other C4 derivatives, had an explosion at its Port Neches, Texas, facility in November 2019. It also experienced outages related to severe cold in Texas in early 2021. TPC’s bankruptcy reorganization will resolve its liabilities from the Port Neches incident and will remove $950 million in debt from its balance sheet.

Selected Articles from This Issue

Whether neighborhood obesogenic factors are associated with prostate cancer risk has not been studied. DeRouen and colleagues examined neighborhood socioeconomic status and obesogenic environment factors (urbanicity, mixed-land development, unhealthy food environment, and parks) for associations with risk of prostate cancer among 41,563 African American, Japanese American, Latino, and White males in the Multiethnic Cohort Study. The study is unique in assessing neighborhood factors and prostate cancer risk while considering disease aggressiveness as well as individual-level sociodemographic, behavioral, and prostate cancer risk factors. Independent associations of obesogenic environment factors with prostate cancer risk varied by race, ethnicity, nativity, and disease aggressiveness.Modifiable lifestyle-related factors heighten the risk and severity of COVID-19 in patients with cancer. Whether exercise lowers susceptibility or severity is not known. Bliss and colleagues examined the relationship between exercise and COVID-19 risk and severity in 944 cancer patients. In this single institution study, cancer patients meeting national exercise guidelines had lower susceptibility to COVID-19 relative to their sedentary counterparts even after adjustment for important clinical and epidemiologic covariates. Exercise reduced the risk of COVID-19 infection in patients, but not its severity. This data adds to the growing evidence base of exercise benefit following a cancer diagnosis.Adolescent and young adult (AYA) women with cancer can face additional financial stressors from fertility services that are often not covered by insurance. Meernik and colleagues surveyed AYA cancer survivors in North Carolina and California to examine whether women who used fertility preservation had increased financial hardship. Fertility preservation was associated with 1.5 times the likelihood of borrowing money, going into debt, or filing for bankruptcy; and 12% of women who used fertility preservation reported debt of ≥$25,000 (vs. 5% in the referent group). More widespread insurance coverage could expand access to fertility services and decrease adverse financial outcomes after cancer.As alcohol consumption has a J-shape association with colorectal cancer risk (CRC), non-drinking and heavy drinking are both risk factors for CRC. In this study, individual-level data was pooled to compare non-drinkers (<=1 g/day) and heavy drinkers (>28 g/day) with light-to-moderate drinkers (1-28 g/day) in gene-alcohol interaction analyses. This study suggests that the association with CRC in 10q24.2/COX15 was strongest in non-drinkers. Jordahl, Shcherbina, and colleagues also identified rs1318920 as the putative causal regulatory variant for the region. The study identifies multifaceted evidence of a possible functional effect for rs1318920.

KEWENANGAN MENTERI.KEUANGAN DALAM.MENGAJUKAN PERMOHONAN PAILIT BUMN

State Owned Enterprises (SOE) are the state’s mediator that is expected to be able to achieve their initial goals as agents of development. However, such goals are often difficult to achieve because they are too costly. SOE’s performance is considered inadequate. It only delivers an insignificant impact which could lead to bankruptcy. This study examines how SOE bankruptcy arrangements are executed and what the authority of the minister of finance in submitting bankruptcy applications are. This study1uses a normative juridical method with a conceptual statutory approach to approach SOE bankruptcy arrangements in Law Number 37 of 2004 Article 21paragraph (5). The object in this study is Merpati Nusantara Airlines Ltd. The study found that only the finance minister is entitled to file a bankruptcy action for an SOE engaged in the public interest based on the elucidation of Article 2 paragraph (5) of Law Number 37 of 2004 regarding the authority to file a bankruptcy. In Law.Number 19.of 2003 concerning State-Owned Enterprises, in contrast to state-owned enterprises, whose capital is divided into shares, a public company is defined as a company whose capital is wholly owned by the state and is not divided into shares. All or at least 51%.are owned.by the state. Tge Supreme Court Decision Number: 447 K/pdt.sus-pailit/2016 rejected Sudiyarto and Jafar Tambunan's appeal. The judge's considerations rejected the appeal because the applicant was not entitled to file for bankruptcy. According to the judge, only the finance.minister can apply for bankruptcy

Economic policy uncertainty and bankruptcy filings

Applying machine learning techniques to predict bankruptcy in the sample of French, Italian, Russian and Spanish firms, the study demonstrates that the inclusion of economic policy uncertainty (EPU) indicator into bankruptcy prediction models notably increases their accuracy. This effect is more pronounced when we use novel Twitter-based version of EPU index instead of original news-based index. We further compare the prediction accuracy of machine learning techniques and conclude that stacking ensemble method outperforms (though marginally) machine learning methods, which are more commonly used for bankruptcy prediction, such as single classifiers and bagging.

Corrigendum to: Banking Regulatory Constraints and Personal Bankruptcy Filings in the US

Corrigendum to: Banking Regulatory Constraints and Personal Bankruptcy Filings in the US

Stiffing the creditor: Asset verifiability and bankruptcy

Evidence suggests that asset pledgeability, debt complexity, and control rights of dispersed debt influence financial distress resolution. We model how courts’ imperfect verifiability of assets and valuable control of misaligned creditors shape firms’ debt structure and create coordination problems that determine distress outcomes and financing. A key result is that an increase in verifiability allows financially constrained firms to fund projects by pledging more assets to misaligned creditors, making contract renegotiation in distress times more difficult and increasing the probability of bankruptcy. Since equity receives less in the event of distress, constrained firms choose riskier projects with higher returns. Consistent with our model, bankruptcy filings increase after the U.S. Supreme Court decision imposing a “market test” to assess the value of stockholders’ interest in debtor proposals. The effect is stronger for firms with low asset verifiability. These firms also experienced an increase in recovery rates, debt capacity, and risk-taking. Our findings suggest that reforms improving the verifiability of assets substantially impact credit access. However, our results also point out that improving asset verifiability may be insufficient for constrained firms with aligned creditors. Therefore, complementary reforms that facilitate firms’ access to creditors from different market segments may be necessary.

Bankruptcy costs and the design of preventive restructuring procedures

A European directive requires Member States to give firms access to preventive restructuring procedures. This paper assesses the benefits of having a procedure that is distinct from that for insolvent firms. It is based on the French experience, where a preventive procedure has coexisted alongside the more common restructuring procedure since 2006. The spatial and temporal heterogeneity of the commercial courts’ decisions allows the identification of the causal impact of the conversion from the preventive procedure to the common one on the firm’s survival chances. Using an (almost) exhaustive sample of preventive bankruptcy filings over 2010–2016, we show that conversion reduces the probability of firm survival by 50 percentage points, which corresponds to indirect bankruptcy costs of around 20% of the firm’s assets. Our interpretation is that the low restructuring rate under the common bankruptcy procedure may alarm some of the firm’s stakeholders, especially its customers. This in turn aggravates the firm’s difficulties and reduces its chances of restructuring under the common procedure. We provide some empirical evidence to support this interpretation. A distinct preventive procedure helps prevent this spiral.

Floridian bankruptcies and local property damage in the United States

PurposeThis study aims to examine the linkage between bankruptcy filings and hurricane events. Several independent variables related to local district court bankruptcy filings are examined. The primary question posed is whether Category 3,4 and 5 hurricanes result in personal bankruptcy filings due to the real property and other damage that ensures.Design/methodology/approachLandfall hurricanes in Florida from 2001 through 2018 were examined by using the fully modified least square regression model. Descriptive statistics include elasticity measures that show statistics prior and post the passage of the Bankruptcy Abuse and Prevent and Consumer Protection Act of 2005 (BAPCPA).FindingsThe elasticity of housing prices was a useful statistic in explaining bankruptcy filings. Regression results indicate that bankruptcy filing occur within one year of a serious hurricane. The regression model found hurricane events and housing price trends were significant variable when predicting district court bankruptcy filings.Practical implicationsBAPCPA targets fraud under Chapter 7 bankruptcy filings. Unfortunately, this also had the unintended consequence of discouraging legitimated filings due to the lowering of the marginal benefit associated with filing when the “means test” is applied.Social implicationsLack of flood insurance coverage and stagnant real estate prices could limit the desirability of filing under Chapter 13 resulting in an inventory of damaged properties being foreclosed.Originality/valuePrior researchers relied on a descriptive approach by using percentage rates to quantify the association between hurricane damage and bankruptcy filings. By using the fully modified regression-based approach, the study herein establishes that filings occur approximately a year after the household experiences the real property loss and identifies other casual factors that influence the decision to file.

From research to practice: Incorporating consumer bankruptcy into community development initiatives

ABSTRACT This manuscript presents a case study illustrating how simple, visual analytics tools can be used to longitudinally assess consumer bankruptcy filings in a single community. In doing so, it provides a template for leaders in other communities to follow in conducting their own assessments. The case study focuses on the Logan neighborhood in Spokane, WA, a blue collar neighborhood which is home to Gonzaga University. This allows for simple comparisons to assess evolutionary changes in bankruptcy filings, within the Logan neighborhood over time, as well as comparisons to other Spokane neighborhoods that have less diversity and higher mean incomes.

Beginner's Luck that Hertz

In United States bankruptcies, the absolute priority rule dictates that shareholders recover no value unless creditors are paid in full. Because unsecured creditors are typically not paid in full, shareholders lose their ownership interest and recover little to nothing in bankruptcy. Despite the minuscule chances that debtors’ shareholders will recover their investment in bankruptcy, debtors’ stocks continue to trade in large volume during bankruptcy. Amateur investors, who know little about the small chance of shareholder recovery, buy bankrupt company stock—especially that of well-known public companies trading at low prices—from sophisticated, institutional investors. Consequently, amateur investors can see huge losses during the bankruptcy process, while institutional investors are able to hedge some of their losses from now-insolvent companies. 
 The current public and private regulatory regimes do not have the authority or desire to protect amateur investors trading bankrupt company stock. This Note proposes that Congress adopt an amendment to the Bankruptcy Code that grants bankruptcy courts a limited power to suspend trading in a company’s stock after the company files for bankruptcy. To trigger this measure, the courts must determine that shareholders are likely to receive little to no value in bankruptcy and that amateur investors will ignorantly purchase such bankrupt company stock. This Note then discusses the proposed amendment and its potential consequences and responds to expected criticisms of the amendment.

Banking Regulatory Constraints and Personal Bankruptcy Filings in the US

ABSTRACT The economic well-being of a household depends on its access to credit and also its access to a legal system for managing over-indebtedness. Our hypothesis is that the removal of regulatory constraints on a bank’s ability to expand in new geographic markets increases households’ access to credit, which in turn, contributes to a rise in consumer defaults. In the US, we find a net increase in Chapter 13 bankruptcies following a loosening of a state’s restrictions on multi-branch banking, compared to the increase in Chapter 13 bankruptcies in states that did not change their banking rules. The increased mortgage lending after branch deregulation helps explain this rise in Chapter 13 filings, suggesting that homeowners use the Chapter 13 code to save their houses. Further, the effects of the mortgage supply channel are greater in areas with low bank concentration. Overall, our findings are relevant to policymakers in their efforts to either set up a new personal insolvency regime or modify the existing bankruptcy process.