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The CV effect: How far do the chances to reorganize depend on the bankruptcy judges’ profile?

Régis Blazy and Stéphane Esquerre ()
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Stéphane Esquerre: Ministère de la Justice, France

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: This paper explores the linkage between the individual profiles of Parisian commercial judges with bankruptcy affairs they supervised between 2006-2012. We show that a “CV effect” prevails: the firms’ actual chances to reorganize after bankruptcy filing vary with the composition of the chambers. We also confirm the existence of a limited (but not marginal) appointment bias suggesting that the bankruptcy affairs are not fully randomized across judges. Several variables accounting for the judges’ profiles exert a significant influence on reorganization. First, the presence of female judges increases the chances of a successful plan. We find a similar influence of the judges’ managerial skills and of the highest academic profiles. Yet, a mismatch between the judges’ profiles (mostly oriented towards big businesses) and the firms (closer to SMEs) undermines the probability to reorganize. We also refined our analysis by focusing on the two main filters for reorganization: i) the decision to open an observation period, ii) the supervision of such period by juges commissaires. Overall, our approach provides useful elements of answer on how to reduce type 2 errors during the bankruptcy process. Our findings lead to normative recommendations in order to better align consular Justice with the litigants’ needs. The results on France can extend to other mixed consular systems.

Keywords: Bankruptcy; Reorgnization; Consular Justice; Commercial Court; Judges; CV (search for similar items in EconPapers)
JEL-codes: G33 K22 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-law
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Handle: RePEc:lar:wpaper:2019-07