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Nontraditional lenders are important credit providers for farmers. However, previous research has found that farmers who use nontraditional lenders are riskier lending opportunities. Using a unique dataset of Chapter 12 bankruptcy cases, the authors analyze the share of payment that is made or allowed by the courts on debt owed to traditional and nontraditional lenders.

The authors use a Tobit model to calculate parameter estimates and marginal effects of the impact of creditor type (traditional/nontraditional) and debt classification (secured, priority and unsecured) on the proportion of a bankruptcy claim that lenders receive or are expected to receive when a case is discharged.

The authors find that traditional lenders with secured debt receive a greater repayment than nontraditional lenders. Meanwhile, there are more than twice the number of nontraditional lenders that are owed debt in these bankruptcy claims. While this raises concern for nontraditional lenders, that is mitigated some by the level of debt that is on average about one-sixth the size of the average debt of traditional lenders. Finally, the authors show there are numerous opportunities for future research in this area using case level bankruptcy data.

This paper fills a research gap by focusing on the state of nontraditional lenders in Chapter 12 bankruptcy cases and their treatment in discharged cases.

Despite the enormous size of the nonprofit sector, there has been very little empirical research done on the capital structure of nonprofit organizations, and no one has examined the potential effects of borrowing on individual contributions. Using a representative sample of nonprofits, the empirical analysis first determines whether secured or unsecured borrowing by nonprofits influence future contributions. The results for the full sample support a “crowding-out” effect. When the analysis is repeated on a subsample of nonprofits that are older, larger, and more dependent upon donations, the results are more ambiguous: secured debt has little or no effect, while unsecured debt has a “crowd-in” effect. The empirical analysis is then expanded to test whether nonprofits with higher than average debt levels have different results than nonprofits with below average debt levels. The results suggest that donors do remove future donations when a nonprofit is more highly leveraged compared to similar organizations.

This paper summarizes a study, undertaken by Arthur Andersen’s Intellectual Property Group in London, to consider the economic and financial issues, principally as they affect the valuation of intellectual property and its suitability as security. The study encompasses a review of available literature, interviews and discussions, and an analysis of the results of a questionnaire which was distributed to owners and managers of intellectual property. Views were canvassed across industries, of both borrowers and lenders, and also of lawyers and other advisers experienced in the transactions involving intellectual property.

Pledging collateral to secure loans is a prominent feature in financing contracts around the world. Existing theories disagree on why borrowers pledge collateral. It is even more challenging to understand why in some countries collateral coverage exceeds, for example, 300% of the value of a loan. This study looks at the association between collateral coverage and country-level governance and various institutional proxies. It investigates the economic implications of steep collateral coverage and sketches policy options to lower ex-ante asymmetric information and ex-post agency problems. Within this framework, should a lender collect the debt forcibly on default and liquidated assets fetch prices below outstanding loan values, the lender’s loss is covered through credit insurance, which would significantly reduce the need for steep collateral coverage. This proposal may increase level of private credit, investment and growth; particularly, in a number of developing countries where collateral spread is the main inhibitor of finance.

This paper aims to analyze the question of how household indebtedness impacts households’ incentives to search for and accept work after displacement.

To analyze the relationship between household indebtedness and unemployment duration, this paper applies standard proportional hazard models. For data, this paper relies on the longitudinal US National Survey of Income and Program Participation (SIPP), covering the period between 2008 and 2012.

The findings show that a 10% increase in household debt increases the likelihood (hazard) of leaving unemployment by 0.2%–0.4% points. Independent of measuring a household's indebtedness and in light of a series of robustness tests, the results indicate that the pressure of servicing an existing debt burden forces individuals to return to work.

From a policy perspective, the research findings support the notion that household indebtedness plays an important mediating role for labor market outcomes through influencing households’ incentives to return to work after displacement. This finding has important implications for the design of effective policy responses to mass layoffs during the current pandemic.

A key innovation of the research is that we can show that household indebtedness impacts the labor supply side. From a macroeconomic perspective, this insight is important in better understanding the role of increased indebtedness (and financialization) in amplifying aggregate macroeconomic dynamics.

The demand-side view of creditor rights posits a negative association between creditor rights and corporate borrowings. The purpose of this paper is as follows: first, the author examines whether the demand-side effect is more pronounced amongst firms with excess promoter shareholding. Subsequently, the authors analyze the impact of high promoter holdings on investment decisions owing to bankruptcy reforms.

To answer the above questions, the authors exploit the passage of the Insolvency and Bankruptcy Code (IBC) (2016) that strengthens the creditor rights of lenders, which impacts the borrowings and financing activities of Indian corporates. Using a panel of listed Indian firms over the period of 2012–2019, the authors analyze how the IBC affects firms’ borrowings and financing decisions with excess promoter holdings.

The authors find that bankruptcy reforms led to a statistically significant decline in the use of borrowed funds (primarily secured and long-term debt) by firms with high concentrated holdings. The analysis also indicates that firms with excess promoter ownership face an increased cost of debt due to bankruptcy reforms. As a result, firms with excess promoter holdings curtail their investments. Overall, the results indicate that India’s bankruptcy reforms significantly affect the firms’ financing and investment decisions with highly concentrated ownership.

While past research has explored the relationship between bankruptcy reforms and demand for/supply of debt, the authors provide novel empirical evidence on the role of promoter holdings that affects the relationship between bankruptcy law and financing and investment decisions. To the best of the author’s knowledge, this study is the first to investigate the role of ownership structure in the context of bankruptcy reforms by using a quasi-natural experiment.

The purpose of this paper is to examine the difference of credit enhancement of variously secured bonds issued by local government financing platform bond (LGFPB).

The approaches to secure the bonds usually include mortgage, collateral, guarantee, etc.

Using a sample of LGFPBs issued during the 2007-2013 period, the authors find that all of the approaches to secure the bonds would increase the bond rating and that compounded approaches have a higher credit enhancement effect than single approaches. Among these approaches, the requirement of collateral has the strongest enhancement effect. Moreover, the authors find that the guarantee provided by a state-owned bank or enterprise increases the bond rating more than the guarantee provided by other local government financing platforms.

The findings in this study suggest that the credit enhancement would be deeply affected by the approach used to secure the bond.

These results can help the local government make better decisions when issuing bond.

This study empirically analyzes the different credit enhancement approaches for securing LGPFBs for the first time and contributes to the literature regarding credit ratings of local government bonds.

The traditional form of legal research with its predominant emphasis on doctrinal and theoretical analysis is now increasingly augmented by empirical research that seeks to document actions and decisions and draw broader conclusions. This relatively new research tradition is arguably making a positive contribution to legal theory and practice, particularly in the USA [for a general discussion see SJ Lubben, “Do Empricial Bankruptcy Studies Matter?” (2012) 20 ABI L Rev 715]. The paper aims to report on the use of empirical research to examine corporate governance in the context of financially distressed UK public companies.

The paper uses statutory corporate filings and mandatory stock exchange reports to document the process of informal debt resolution prior to the company’s entry into administration or Company Voluntary Arrangement. The findings are presented in an innovative way as a series of case studies focusing on process, participants and outcomes of informal debt resolution.

The paper concludes that it is possible to use case study research as a means to explore corporate governance in the context of financially distressed companies. Although such an approach is challenging in various ways, there are some advantages that complement more traditional research approaches. The findings show how directors’ attention shifts away from shareholders’ interests to those of creditors at times of financial distress and challenges conventional models of governance that stress shareholder value.

The distinctive features of the research are the development of a case-study based approach that draws on publicly available data sources, a process based analysis and a synthesis of corporate governance and law.

States the two factors affecting how much a creditor can recover to be: the size of the state; and how that estate is distributed. Considers the status of secured debts, costs of bankruptcy, preferred debts, distress, ordinary debts, deferred debts and specially deferred debts in order of precedence in distribution of an estate.

The purpose of this paper is to investigate the determinants of bankruptcy protection duration of Canadian public firms, and also investigate the duration for various bankruptcy outcomes including the liquidation and re-emergence of bankrupt firms.

This study uses data on all Canadian public firms that applied for bankruptcy protection over the period 1992–2014. The authors mainly apply duration and survival analyses to draw the main conclusions.

The authors find that larger and older firms with more complicated structures and issues to settle tend to remain under protection from creditors longer, and also ascertain that the fate of relatively successful companies is determined faster. Moreover, the authors report that it takes less time to achieve a final solution for firms under bankruptcy protection when interest rates are increasing and the term spread is high. Finally, firms that file for protection under the Companies’ Creditors Arrangement Act (CCAA) spend longer restructuring than firms that file under the Bankruptcy and Insolvency Act.

The paper investigates only publicly listed firms. The data on private firms that are required to conduct the research are not available.

Various stakeholders including regulators can predict the bankruptcy protection period using the paper’s findings. Depending on the desired outcomes (reduce uncertainly, safeguard jobs or protect creditors’ rights), specific rules can be followed.

To the authors; knowledge, this is the first paper that investigates the Canadian bankruptcy protection duration. It uses the unique Canadian framework to infer the determinants of bankruptcy protection duration and bankrupt firms’ outcomes.