Consequences Of Bankruptcy Research Articles

Impact of Bankruptcy on Firms Performance

Bankruptcy represents a critical event in the lifecycle of a firm, profoundly affecting its operational, financial, and strategic dimensions. This study aims to provide a comprehensive analysis of the impact of bankruptcy on firm performance, exploring various facets of its implications on both short-term and long-term operational effectiveness, financial health, and market position. The research adopts a mixed-method approach, integrating quantitative analysis of financial data with qualitative insights from case studies and expert interviews. Firstly, the study examines the immediate consequences of bankruptcy, such as disruptions in operations, loss of market trust, and creditor actions. It investigates how these factors contribute to declines in revenue, profitability, and market share in the short term, often leading to asset liquidation and restructuring efforts. Moreover, the research delves into the long-term repercussions of bankruptcy, including the enduring effects on organizational reputation, employee morale, and stakeholder relationships. It investigates the challenges faced by firms in regaining market credibility, attracting investment, and rebuilding their competitive advantage post-bankruptcy. Furthermore, the study analyses the role of management strategies, such as turnaround initiatives and reorganization efforts, in mitigating the negative impacts and facilitating recovery. Additionally, the research explores the sector-specific dynamics of bankruptcy effects, considering variations in industry regulations, market competition, and technological disruptions. It investigates how factors such as industry concentration, market demand elasticity, and technological obsolescence influence the severity and duration of performance decline following bankruptcy. Overall, the findings of this study contribute to a deeper understanding of the multifaceted implications of bankruptcy on firm performance, offering insights for managers, policymakers, and investors in navigating the challenges associated with financial distress and facilitating sustainable recovery strategies.

Predicting Bankruptcy on Oil Companies Before and After the Pandemic Using Two Altman's Z-Score Models. Industrial and Emerging Markets. Evidence from Greece

This paper is prepared with the aim of establishing whether there is a possible bankruptcy of the Greek oil companies Listed on the Athens Stock Exchange in the last six years 2016-2021. This period under consideration also includes the two years of the 2019-2020 pandemic. Design/methodology/approach -The effort of this study is carried out using the Altman Z-Score model bankruptcy model for Emerging Markets. This paper focuses on bankruptcy, a situation which is a consequence of financial failure. Bankruptcy can happen to any organization or government body. The consequences of bankruptcy, as is known, are many and important. The main ones are the possible increase in unemployment, the decrease in the standard of living and in general the creation of a climate of economic discomfort. Findings -The results of this study indicate that the exit of the Greek economy from the Memorandum of the IMF and Eurozone lenders had a positive effect on the Greek oil companies listed on the Athens Stock Exchange, which is known as an emerging market. We must also note that the two years of the pandemic did not have a significant negative effects on bankruptcy issues for the same companies. Practical implications -The use of the two Altman's Z-Score model in this study, helps the stockholders and investors to have a conclude financial icon for stocks and bonds and make the right decisions. Originality/value -In order to avoid bankruptcy and therefore the negative consequences that accompany it, many economic scientists have made efforts to predict it. Its prediction can be lifesaving and ultimately prevent it. Among the many important models that have been made, for predicting bankruptcy is the Altman Z-Score bankruptcy model that has stood out because of its very good results in bankruptcy prediction. This particular model is implemented in Greece which is a country with such a strong economic crisis, which has plagued the Greek Economy since 2010, but also during the pandemic period where almost all corporate firms are struggling daily with bankruptcy. Specifically, the Z-Score Altman model will be applied comparatively for the years 2016-2021 to the companies ELIN S.A., MOTOR OIL and REVOIL S.A.E.P., ELPE S.A., which are listed on the Athens Stock Exchange, in order to establish whether there has been or if there is the possibility of bankruptcy of these companies during the time period of our study.

An Evaluation of Debt Agreements in Australia

In the 20 years since their introduction, debt agreements have become the fastest growing form of personal insolvency in Australia, comprising 41.5 per cent of all personal insolvencies in 2016. Debt agreements were introduced to provide debtors respite from financial stress through arrangements with creditors and to provide a viable alternative to bankruptcy. Law reformers posited that their low cost, and the avoidance of some of the consequences of bankruptcy, were among their key benefits. The article draws on three sources of empirical data to evaluate the debt agreement system and its impact on Australian debtors: statistics published by the Australian Financial Security Authority, a survey of individuals who entered into debt agreements or declared bankruptcy between 2010 and 2015, and interviews with a range of industry stakeholders. The article considers the extent to which debt agreements are achieving their objectives and examines concerns that debt agreements may be causing harm, particularly to vulnerable debtors on low incomes. The authors propose a series of reforms to enhance the efficiency of debt agreements.

The Story Behind Bankruptcy: When Business Gets Personal

The number of bankruptcies in a specific period, and levels of debt, are well documented but little is known about the consequences of bankruptcies beyond the numbers. In this study, Dutch entrepreneurs who went through debt rescheduling after personal bankruptcy, were interviewed in order to gain an understanding of the private, personal and social implications of bankruptcy. Recently, systematic investigations of the implications of bankruptcy have been published. However, research has not yet taken the phenomenological experience of the bankrupt entrepreneur into account. Insights into these experiences are of critical importance for obtaining a comprehensive understanding of the impact of the bankruptcy process, and for engaging in a meaningful reform of bankruptcy law. During the interviews in this study, the entrepreneurs reflected on the early days of their business venture, the moment of first detecting the prospect of business failure, their personal experiences during business failure, and the aftermath of bankruptcy and debt rescheduling. The findings indicate that a bankruptcy experience can be compared to losing a loved one: a psychological process similar to mourning. The findings show that a lack of empathy, respect and transparency by formal institutional representatives such as judges, trustees and administrators is seen by the entrepreneurs as ‘emotional punishment’, and can be considered as a major source of their grief. Because of this grief, the bankruptcy and debt rescheduling experience can be extremely stressful causing severe psychological and physical distress. Implications for theory and practice are discussed.

SOCIAL AND ECONOMIC CONSEQUENCES OF BANKRUPCY OF THE COMPANIES IN UKRAINE

As a result of the research it was determined that, the main causes of bankruptcy in the current economic conditions is a violation of financial stability; decline in business activity; significant debt; low liquidity assets, etc.; socio-economic consequences of bankruptcy is the fall in GDP, the decline in industrial and other products; reducing the supply of goods and services in the market; decline in innovation and capital investment; a negative multiplier effect and others; the main types of bankruptcy inherent in national enterprises - a fictitious bankruptcy; deliberate bankruptcy; technical failure; real bankruptcy. In recent years, fictitious bankruptcy is most typical for production assets of corporations that serves as cost centers; actual bankruptcy - in small and medium business; it had been found, that the overall socio-economic consequences of bankruptcy in Ukraine are negative; it has been found that, the nature of the relationship between bankruptcy and indicators of socio-economic development is fairly close, which suggests that domestic enterprises are essential curative measures, measures of financial rehabilitation of enterprises; simplification of the tax regime for small and medium businesses. The model of communication process of bankruptcy and socio-economic indicators of Ukraine demonstrated a significant correlation between the present bankruptcy and tax revenues to the state budget. The impact of bankruptcy on the overall economic development of the country is a scientific and reasonable, which makes recommendations for further research. I have proved the important meaning of bankruptcy in the treatment of various scientists. There were presented internal and external causes of bankruptcy and its types. The next things were developed: the clarification of the external and internal in relation to the subject of business factors affecting its activities; the order of the enterprise is declared bankrupt; the main socio-economic consequences of the bankruptcy of enterprises in Ukraine. The research results can be used in the planning of government measures to prevent the bankruptcy of enterprises and developing strategies to improve the socio-economic development. In future we plan to continue the study and to determine the nature of the model applied to the process of bankruptcy and socio-economic indicators of Ukraine.

Assessing the Financial Health Status of Small Scale Poultry Businesses in Delta State, Nigeria

<p>The study investigated the financial health status of small scale poultry businesses in Delta State, Nigeria using Altman’s Z-score model. The empirical study was undertaken to assess the solvency and hence future survivability of small scale poultry enterprises in the State. Financial data were extracted from three years (2010 – 2012) financial statements of 125 small scale poultry farms purposively selected from farms operating in the State and incorporated with the Nigerian Corporate Affairs Commission as limited liability agribusinesses. Descriptive statistics which include computed financial ratios, frequency distributions, percentages and tables were applied to analyze the content of the financial statements and Altman’s Z-scores’ were computed for each sampled farm for the three year period. The study shows that in 2010, 47.8 percent of farm enterprises had Z-scores between minus 0.60 to 1.55. In 2011 and 2012, 44.8 percent and 42.4 percent, respectively of the farms had Z-scores between negative 0.60 and 1.55. The study further indicates that 28 percent, 27 percent and 30.4 percent in 2010, 2011 and 2012, respectively, of the sampled farms had computed Z-scores between 2.64 and 4.79 farms. The study recommends the use of Altman’s Z-score by small scale investors as a technique for monitoring the financial health of their agribusinesses to prevent the ugly consequences of bankruptcy and liquidation.</p>

Life after Debt: Understanding the Credit Restraint of Bankruptcy Debtors

Bankruptcy gives individuals a fresh start by allowing them to discharge much of their unsecured debt. But the consequences of bankruptcy do not end when the legal process is complete. After bankruptcy, families still must figure out how to make ends meet and how to interact with the credit economy. This paper presents data showing that bankruptcy transforms how people borrow. Despite very difficult financial circumstances after bankruptcy, most families initially refuse new credit. As years elapse, more families begin to borrow. The overall pattern of credit use is restrained, however, compared both with Americans generally and with these families' pre-bankruptcy borrowing. While the modest use of credit could reflect an inability to access credit markets, this paper argues that the limited use of credit is consistent with an alternate hypothesis: that bankruptcy debtors discipline themselves in their future credit use, even in the face of temptation by lenders and their households' ongoing financial struggles. This interpretation of the data suggests that people who have endured financial failure may curtail their future economic activity. Such actions are evidence of the pain of declaring oneself broke and of the way in which bankruptcy may shape debtors' decisions for years to follow.

Bankrupt accountants and lawyers

PurposeThe purpose of this paper is to study the incidence, impact, and consequences of accountant and lawyer bankruptcies in Victorian Scotland. The paper examines these bankruptcies in the context of an emerging profession separating from an established legal profession as part of the rise of professionalism in the Victorian Age.Design/methodology/approachThe paper reports data describing 135 accountant and 361 lawyer bankruptcies declared between 1855 and 1904. It uses theories of the rise of professionalism, signals of movement to occupational ascendancy, and social attitudes to money to provide explanations of the incidence, impact, and consequences of these bankruptcies. The paper also examines bankruptcy and the early disciplinary codes of professional accountancy associations.FindingsDespite a trend of general decline in total, accountant, and lawyer bankruptcies in Scotland through the Victorian Age, there is no consistency over time between accountant and lawyer bankruptcies and economic conditions. Bankrupt accountants were typically unregulated as professionals in contrast with bankrupt lawyers who were usually regulated. Accountant and lawyer bankruptcies predominantly involved experienced practitioners, location in major cities, and administration by professional accountants. Bankruptcy was associated with criminal activity in a minority of cases in each profession. There was inconsistency in the post‐bankruptcy disciplining of bankrupt accountants and lawyers, and post‐bankruptcy loss of economic status in both professions.Practical implicationsThe paper contributes to the Victorian history of institutionalised professions such as accounting and law. It demonstrates the presence of marginal practitioners in emerging and established professions, the need to study professionalisation in social context, and the impact of bankruptcy on discipline in an emerging profession.Originality/valueThe paper represents the first contextualised study of bankruptcy among professionals generally and accountants and lawyers, particularly in the Victorian Age.

Troubled Waters: What the Gulf Oil Spill Reveals about the Consequences of Bankruptcy

Troubled Waters: What the Gulf Oil Spill Reveals about the Consequences of Bankruptcy