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Article
An analysis of second time around bankruptcies using a split-population duration model
Journal of Empirical Finance
  • Arindam Bandopadhyaya, University of Massachusetts Boston
  • Sanjiv Jaggia, Suffolk University
Publication Date
5-1-2001
Abstract

A significant proportion of firms that reorganize under Chapter 11 file for a second Chapter 11 protection or liquidate. We use a "split-population" duration model that provides useful information regarding factors that could lead to a second bankruptcy. We find that the probability (hazard) of a firm re-entering bankruptcy is lower for firms that take a long time to reorganize, reduce their debt-to-assets ratio, do not divest, belong to an industry that has low capacity utilization and low demand growth. We also find that the probability of an average firm re-entering bankruptcy increases for about 4 years before declining.

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Citation Information
Arindam Bandopadhyaya and Sanjiv Jaggia. "An analysis of second time around bankruptcies using a split-population duration model" Journal of Empirical Finance Vol. 8 Iss. 2 (2001) p. 201 - 218
Available at: http://works.bepress.com/arindam_bandopadhyaya/11/