УНАПРЕД ПРИПРЕМЉЕНИ ПЛАНОВИ РЕОРГАНИЗАЦИЈЕ И ПРОБЛЕМ НЕГАТИВНЕ СЕЛЕКЦИЈЕ
PREPACKS AND THE ADVERSE SELECTION PROBLEM

Summary/Abstract: The article presents the first detailed econometric analysis of prepackaged reorganization plans in Serbia. Pre-pack offers tremendous incentives for debtors in financial difficulties making it their preferred restructuring alternative. Using the sample of 97 cases, we show that prepack fails to filter out inefficient firms as we find no evidence to suggest that the debtors who file pre-packaged plans are in significantly better financial position than those whose plans are submitted after the opening of bankruptcy proceedings. Filtering failure is a result of the poor implementation of the law and creditors’ passivity. We examine regulatory and market approaches for solving the problem of adverse selection of debtors filing a pre-packaged bankruptcy.

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