This thesis aims at delivering a documentation as complete as possible of bankruptcy events of formerly listed French companies over the time period from 1990 to 2009. The generated dataset is analyzed in detail with regard to changes in the French insolvency framework over a twenty-year timeframe.
Table of Contents
1. Introduction
2. Bankruptcy Regulation – Aims and Characteristics
2.1 An Introduction to Western Bankruptcy Regimes
2.2 Bankruptcy Regulation in France
2.2.1 An Overview – The Post 1985 Situation
2.2.2 Early Reforms
2.2.3 The Reforms of 2006 and 2009
2.2.4 Review and Criticism
2.3 Comparing French and US Insolvency Regimes
3. Hypotheses
3.1 Hypothesis 1: The ratio of successfully organized companies rose in the course of the bankruptcy reforms.
3.2 Hypothesis 2: Equity returns of insolvency-struck companies are comparably lower previous to insolvency.
3.3 Hypothesis 3: Profitability of successfully reorganized companies is comparably higher than that of liquidated firms.
4. Data
4.1 The Initial Data Collection Process
4.2 Presentation and Interpretation of Data - Computation of Descriptive Statistics
4.2.1 Preliminary Assessment of the Quality of Gathered Data
4.2.2 Historical Development of the Occurrence of Bankruptcy Events
4.2.3 Successful Reorganization vs. Liquidation
4.2.4 Equity Returns
4.2.5 Firm Profitability
5. Summary and Conclusion
Research Objectives and Key Topics
This thesis aims to provide a comprehensive documentation of bankruptcy events for formerly listed French companies from 1990 to 2009. The primary research goal is to analyze how legislative changes in the French insolvency framework have impacted the survival rates and economic performance of companies facing financial distress.
- Evolution of French bankruptcy legislation and comparison with US regimes.
- Empirical analysis of bankruptcy outcomes (reorganization vs. liquidation).
- Assessment of equity returns and firm profitability for insolvent companies.
- Impact evaluation of major legal reforms, specifically the 2006 "Law of the Safeguard of Companies".
Excerpt from the Book
2.1 An Introduction to Western Bankruptcy Regimes
Modern western bankruptcy laws reach as far back as the 13th and 14th century. They emerged from the mayor trading centers in northern Italy (Venice, Florence, Pisa, Genoa) and quickly expanded to other European cities such as Marseilles, Lyon, Barcelona and Lübeck as the need for creditor protection and reliable outcomes in the case of financial distress of a trading partner rose with expanding economic activity and complexity. In an environment where great information asymmetries were a daily occurrence and financing was often based on personal relationships, the sudden dry up of a business’ or individual’s cash position was not an extraordinary event and could strike troubled and operationally healthy businesses to the same extent.
Rules were stated and enforced by commercial courts, which the merchants themselves installed. If necessary, decisions of the courts could be enforced by governmental agencies. It is noteworthy that insolvency at this time and also for the upcoming centuries was generally considered a criminal offense, often penalized with prison sentences. The so called Napoleonic Code of 1808, which was employed throughout whole Western Europe at that time, delivers a good example for rigid and repressive handling of insolvent borrowers throughout the 19th century. In 1866 prison sentences for bankruptcy were abandoned in France, followed by England in 1889.
Summary of Chapters
1. Introduction: This chapter outlines the thesis objective to document bankruptcy events of French companies from 1990–2009 and introduces the research approach.
2. Bankruptcy Regulation – Aims and Characteristics: This section details the historical background of bankruptcy regimes and analyzes the specific French legal framework, including comparisons to US regulations.
3. Hypotheses: This chapter defines the three core hypotheses regarding corporate survival rates, equity returns, and profitability linked to bankruptcy reforms.
4. Data: This section describes the extensive data collection process and provides detailed descriptive statistics regarding bankruptcy occurrences and outcomes.
5. Summary and Conclusion: This final chapter synthesizes the research findings, evaluates the impact of the 2005/2006 reforms, and draws conclusions on the efficacy of the insolvency framework.
Keywords
Insolvency, Bankruptcy Regulation, France, Reorganization, Liquidation, Law of the Safeguard of Companies, Equity Returns, Firm Profitability, Corporate Failure, Financial Distress, Creditor Protection, Debt Restructuring, Business Law, Economic Performance, Reform Impact.
Frequently Asked Questions
What is the primary objective of this research?
The research aims to document and analyze the impact of various bankruptcy reforms in France between 1990 and 2009 on the success rates of company reorganizations versus liquidations.
What are the central thematic areas of the paper?
The study focuses on the legal development of French insolvency law, the historical occurrence of bankruptcy events, and the financial performance of companies undergoing restructuring.
What scientific methodology is applied?
The author employs a quantitative empirical approach, utilizing a self-generated dataset of 181 insolvencies of formerly listed French companies, analyzed alongside descriptive statistics and financial data.
What does the main body cover?
The main body examines the history of bankruptcy regimes, contrasts the French system with US Chapter 11/7, tests specific hypotheses about corporate performance, and performs a detailed statistical analysis of the gathered firm data.
Which key indicators are used to measure reform success?
The research evaluates success through the ratio of successfully reorganized firms, equity market returns, and firm profitability measured by the EBITDA / Total Assets ratio.
How does the French insolvency framework compare to the US?
The paper highlights that while both seek to minimize costs, the French system historically has been more protective of the firm's continuation and employment, whereas the US system provides robust frameworks for efficient liquidation and reorganization with different stakeholder incentives.
Why is the "Law of the Safeguard of Companies" from 2006 significant?
It represented a major procedural shift designed to move companies toward reorganization earlier in the financial distress process, mirroring some aspects of US Chapter 11 proceedings.
What role does the appendix serve?
The appendix provides a comprehensive, detailed list of the 181 insolvent companies analyzed, specifying their procedure type, outcome, and relevant financial data points for transparency.
- Arbeit zitieren
- MSc Thomas Hoehl (Autor:in), 2009, Insolvencies and Insolvency Regulation in France, München, GRIN Verlag, https://www.hausarbeiten.de/document/181582
