Ex-ante efficiency of bankruptcy procedures

Francesca Cornelli, Leonardo Felli*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

40 Scopus citations


This paper suggests a framework to analyze the efficiency properties of bankruptcy procedures, distinguishing between ex-ante and ex-post efficiency. Ex-post efficiency consists in maximizing the ex-post value of the insolvent firm, whereas ex-ante efficiency consists in maximizing the proceeds to creditors from the reorganization of the firm and providing incentives for the creditors to monitor the firm. We show that the definition of creditors' ownership rights over the company and the protection of the creditors' seniority, are crucial to asses the ex-ante efficiency of a bankruptcy procedure.

Original languageEnglish (US)
Pages (from-to)475-485
Number of pages11
JournalEuropean Economic Review
Issue number3-5
StatePublished - Apr 1997

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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