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When secured and unsecured creditors recover the same: The emblematic case of the Tunisian corporate bankruptcies

Régis Blazy and Aziza Letaief

Emerging Markets Review, 2017, vol. 30, issue C, 19-41

Abstract: Bankruptcy is an essential screening mechanism for developing economies. This paper focuses on the way bankruptcy is managed in Tunisia, a country characterized by the importance of its banking sector. We collected data on a set of bankrupt firms (1995–2009). We address several questions. Do the Tunisian bankruptcy procedures generate substantial overall recoveries? Are the secured creditors (mostly banks) well-enough protected under bankruptcy, and do they influence the courts' decisions? To which extent the creditors compete together? The highest recoveries are found mostly under reorganization procedures. Yet, despite a high level of competition between the classes of claimholders, the secured creditors' recovery rate remains similar to one of the unsecured creditors. Last, the court's decision to liquidate/reorganize the debtor seems not influenced by the structure of claims. The likely consequences on development are twofold: higher risks of capital misallocation/credit rationing, and stronger incentives for the banks to prioritize informal workouts.

Keywords: Bankruptcy; Creditors; Development; Tunisia; Heckman model; Propensity score (search for similar items in EconPapers)
JEL-codes: G33 K22 O16 (search for similar items in EconPapers)
Date: 2017
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Working Paper: When secured and unsecured creditors recover the same: The emblematic case of the Tunisian corporate bankruptcies (2015) Downloads
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