Rehabilitation of the Bankrupt Firm: Property Rights and Entrepreneurship

Francisco Cabrillo
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Francisco Cabrillo: Complutense University of Madrid

A chapter in The Emergence of a Tradition: Essays in Honor of Jesús Huerta de Soto, Volume I, 2023, pp 59-67 from Springer

Abstract: Abstract The efficiency of bankruptcy law has been widely discussed in recent years. The COVID crisis put in the foreground the debate between liquidation and reorganization as the best possible solution to bankruptcy proceedings. It is usual to present this dilemma as a private vs public interest problem. This paper analyzes the problems of reorganization procedures from the theories on the entrepreneur of some prominent economists (Schumpeter, Knight, and Kirzner). According to their models, it is difficult to explain the role of a firm in the marketplace without someone playing the role of entrepreneur. From this perspective, bankruptcy should be understood as an entrepreneurial failure. Reorganization procedures try to solve the crisis, usually, with the appointment of new managers, not entrepreneurs. It is therefore not surprising that, in all countries, these procedures show a very high rate of failure.

Keywords: Bankruptcy; Firms; Liquidation; Rehabilitation; Stakeholders; Property rights; Rent-seeking; Entrepreneurs (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-17414-8_7

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DOI: 10.1007/978-3-031-17414-8_7

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