Commercial Bankruptcy and Financial Reorganization in Canada

The paper examines a micro data set of 417 commercial bankruptcies and 393 financial reorganizations field in Canada during the period 1977-87. Descriptive statistics from the data are used to characterize the0501n features of the bankruptcy process in Canada. Firms in bankruptcy or in reorganization are typically small firms; the former being significantly smaller than the latter. The data shows that firms in bankruptcy are in significantly worse financial condition than firms in reorganization. Finally, the Canadian bankruptcy process is efficient in offering a rapid solution to financial distress. However, the data confirms the view that bankruptcy imposes substantial losses to creditors.
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