Corporate Bankruptcy and the (In-)Efficiency of Small Commercial Courts

Anne Épaulard (1) , Chloé Zapha (1, 2)

1 LEDa - Laboratoire d'Economie de Dauphine
2 Banque de France

This paper assesses the efficiency of small commercial courts. We take advantage of a reform that regroups small commercial courts and estimate its impact on firms' bankruptcy outcomes on the quality of rulings in bankruptcy cases. A conceptual framework allows us to derive the impact of the reform on Type 1 error (restructuring a non-viable firm) and Type 2 error (liquidating a viable firm) from estimated coefficients of a set of difference-in-difference equations. We apply this strategy to an (almost) exhaustive sample of 600~000 bankruptcy cases in France that started between 2000 and 2019. We show that the reform unambiguously reduced Type 1 errors for small firms in absorbed court and left unchanged Type 2 errors. We show that the behavior of the absorbing commercial court now applies to firms that belong to the catching areas of absorbed commercial courts.

Mots clés: Corporate Bankruptcy; Commercial Courts

Domaines: Economies et finances; Droit

Anne Épaulard, Chloé Zapha. Corporate Bankruptcy and the (In-)Efficiency of Small Commercial Courts. 2023. ⟨hal-04214904⟩