recently I presented some work on Strategic Restructuring at the INSOL Europe Academic Forum Annual Conference in Warsaw ( 4-5 October 2017 ).
The work, that is a joint initiative with Leiden University’s Law School, reviews current strategic bankruptcy practice and reflects on alternative strategic modi to move forward given insolvency.
With many growth aspiring firms ending up in turnaround scenario’s instead, this is a highly current theme in strategic management research. below an overview of te project at large:
STRATEGIC BANKRUPTCY AND POST-BANKRUPTCY EMPLOYMENT RETENTION: EVIDENCE FROM THE DUTCH INSOLVENCY FIELD
Although an extensive body exists of research on strategic bankruptcy, the definition and evidence about whether such filings really preserve and/or create value – even as a paradoxical survival mechanism – remain ambiguous. The aim of the study is to investigate whether strategic bankruptcy and financial distress affect employment retention – through the lenses of real options and debt overhang theory. Using a sample of bankruptcies in the period 2012 until 2015, employment retention post-bankruptcy was evaluated as a consequence of the bankruptcy mechanism and the de severity of financial distress pre-bankruptcy. The results indicate that the type of bankruptcy (either strategic or non-strategic filing plays an important role in determining the employment retention rate after bankruptcy. An additional Robust Covariance Matrix Estimation analysis was completed which revealed that the severity of financial distress pre-bankruptcy also plays a marginal role in the employment retention rate post-bankruptcy. Therefore, strategic bankruptcy in its current form may be the best – and only – real option against uncooperative and opportunistic stakeholders in the absence of statutory composition legislation. As to timing of bankruptcy filing, the results indicate that accelerated filing is the preferred option when bankruptcy becomes unavoidable.
Rick Aalbers*, Jan Adriaanse**, Jean Piere van Rest**, Frank van Wersch*, *Radboud University, Institute for Management Research, Centre for Organization Restructuring, ** Leiden University, Department of Business & Law