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Régis Blazy , Joël Petey and Laurent Weill Discussant: João Teixeira University of the Azores

Can bankruptcy codes create value? Evidence from creditors’ recoveries in France, Germany, and the UK. Régis Blazy , Joël Petey and Laurent Weill Discussant: João Teixeira University of the Azores Portugal. EFMA 2010, Aarhus 24 June 2010. Contribution.

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Régis Blazy , Joël Petey and Laurent Weill Discussant: João Teixeira University of the Azores

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  1. Can bankruptcy codes create value? Evidence from creditors’ recoveries in France, Germany, and the UK RégisBlazy, JoëlPeteyandLaurentWeill Discussant: João Teixeira University of the Azores Portugal EFMA2010, Aarhus 24 June 2010

  2. Contribution • Important research question: does the bankruptcy procedure matters in the value creation process under bankruptcy? • “Unique” sample of 900 corporate bankruptcy files. • Analysis is conducted for various classes of claimants (senior claims, junior claims and new money).

  3. Comparison of data and results • Result of Davydenko and Franks (2008): “recovery rates for banks are significantly lower in France than those in Germany and in the UK”. In your study results differ. • What is the proportion of banks in your sample of creditors? How different is it from Davydenko and Franks (2008) that could lead this study to other conclusions? • Is the data really comparable? • The liquidation in the UK relies on the willingness of the sole appointer. Have not controlled for that. • Why not study an industry effect?

  4. Structure of claims • In overall, France and Germany have similar recovery rates (20,67% and 21,26%, respectively) and both have higher rates than the UK (13,82%). • Why do you conclude that the structure of claims, with France having more senior debt than both Germany and the UK, may explain a higher recovery rate in France when compared to the UK? • If France has higher senior debt proportion than Germany, shouldn't we also expect higher recoveries rates in France when compared to Germany?

  5. Quality of the assets • The study measures the quality of the assets using a coverage ratio • Is this a robust measure? • What about the % of fixed assets? • Is that possible to distinguish between tangible and intangible assets? • France has higher coverage ratio than Germany and the UK. The study concludes that this result may explain higher recovery rates in France when compared to UK. • But once again, why this intuition does not leads to the same conclusion when comparing France with Germany? • Correlation between coverage ratio and recovery rate?

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