Does pre‐packed bankruptcy create value? An empirical study of postbankruptcy employment retention in The Netherlands

In recent years, there has been growing interest in whether pre‐packed bankruptcy can be a mechanism through which firms facing imminent insolvency can preserve value. Although an extensive body of literature exists on “pre‐packs,” whether such techniques really preserve value remains ambiguous. By analysing bankruptcy proceedings filed with Dutch courts in the period 2012–2018 through the lenses of real options and debt overhang theory, we examined employment retention postbankruptcy as a consequence of the type of bankruptcy proceeding (pre‐packed bankruptcy and conventional bankruptcy) and the severity of prebankruptcy financial distress. The results show that in the Netherlands, a pre‐packed bankruptcy, when compared with a conventional bankruptcy proceeding, positively impacts employment retention rates after bankruptcy. The severity of financial distress before bankruptcy does not affect employment retention rates postbankruptcy. This implies that despite the amount of resource slack, the preservation of employee value is better served under a pre‐packed bankruptcy than a conventional bankruptcy proceeding. This finding is important for insolvency practice, as up to 22 June 2017, employee rights in the Netherlands (including redundancy) were not considered to be automatically transferred to the firm acquiring the bankrupt debtor's assets when a pre‐packed bankruptcy was applied. Implications for insolvency regulation and practice are discussed.     

Differences in Psychological Strategies of Failed and Operational Business Owners in the Fiji Islands*

This study investigates the differences between failed and operational businesses from a psychological perspective. The sample included 71 operational and 20 failed business owners from Suva, the capital of Fiji. It was hypothesized that operational business owners more often employ a detailed and long‐term planning strategy, whereas failed business owners more often pursue a reactive strategy, that operational business owners set more specific and more difficult goals, and that they have a higher degree of human capital than failed entrepreneurs. The data were analyzed using discriminant analysis. Results confirmed the hypotheses regarding planning and goal specificity.     

Funding corporate rescue: the Impact of the financial crisis

Insolvency reform across many jurisdictions over the last twenty years has focused on the development of legislation to facilitate business reorganizations. However, any regime which involves rescue requires a degree of support from the commercial environment. The rescue regimes may therefore be severely tested in situations where there is a general economic downturn such as the world has experienced in the last two years. This article evaluates empirically the perceived impact of the Global Financial Crisis on the opportunities for rescue on the basis of a survey we set out among insolvency professionals worldwide. Most of the 562 respondents to the survey from 56 jurisdictions agree that the credit crisis of 2007 stifled the access of distressed business to financial facilities so needed for successful restructuring. It retrenched the access to financial facilities and thus impacted negatively the prospects for preventing or even ending the bankruptcy procedure with reorganization instead of winding up of the estate assets. Several reasons that have been pointed out by the insolvency professionals in our survey are discussed in this article. We conclude that somewhat paradoxically just when rescue is needed the most, the practical reality may be that businesses will not be saved if there is insufficient support available either by way of additional credit or because other (funding) creditors are so financially stressed themselves that they are unable or unwilling to support any potential rescue. Copyright © 2010 John Wiley & Sons, Ltd.     

False promises of co-production in neighbourhood regeneration: the case of Dutch community enterprises

Many European countries are implementing austerity measures alongside trends of welfare state retrenchment. Entrepreneurial forms of active citizenship are considered as a new form of public management to fill gaps left by spending cuts and to continue neighbourhood regeneration. Inspired by British practices, Dutch citizens are trying to set up community enterprises (CEs) to provide services or other benefits for residents in deprived neighbourhoods. Based on a qualitative panel study, this article reveals supportive responses but also resistance from local governments and housing associations. Within a positive policy discourse on co-production, institutional responses often encompass forms of ‘counter-production’ that hold CEs in full uncertainty about crucial conditions for their business.     

Environmental Accounting of Eco-innovations through Environmental Input–Output Analysis: The Case of Hydrogen and Fuel Cells Buses

The introduction of environmentally friendly innovations in both transport and energy sectors are included in the list of priorities of the European Union political agenda. This paper investigates the environmental consequences of the introduction of hydrogen and fuel cells technology in the European economic system by applying environmental input–output analysis and life cycle assessment tools. Hydrogen is produced through the reforming of natural gas and it is employed in fuel cells buses that offer transport services to final consumers. We have built three scenarios based on different assumptions on the final demand. We have shown the results for three impact categories: global warming, photochemical oxidation and acidification. The results suggest that the use of hydrogen in fuel cells buses is only environmentally desirable if accompanied either by the employment of renewable sources or by carbon dioxide capture, or both.     

Dutch corporate insolvency law: On the brink of a revolution?

The Dutch Bankruptcy Code (DBC) has not changed fundamentally over the more than 110 years of its existence, at least as far as corporate insolvency proceedings are concerned. On 1 November 2007, however, a committee of insolvency experts presented a draft for an entirely new code to the Ministry of Justice. Whether this new code will gain the force of law and whether this will happen within the near future remains uncertain but the proposals will in any event dominate discussions on insolvency law in the Netherlands for the foreseeable future. The main goal behind many of the proposals is improving the ability to successfully restructure companies that experience financial difficulties. To this end the proposals include various measures that would weaken the position of (secured) creditors. The proposals include widening the scope of the cooling-off period during which secured creditors are unable to enforce their security by granting the administrator a right of use of assets subject to security interests. The ability to rely on early termination clauses in contracts is also reduced during the cooling-off period. The position of secured creditors is further weakened by a proposal to grant the right to sell assets that are subject to security interests to the administrator if he continues the business. Under the current bankruptcy code, secured creditors can largely ignore insolvency proceedings, there is no general stay on enforcement and, early termination clauses in contracts are generally thought to be valid and enforceable during insolvency proceedings. Although banks have already argued that weakening the position of secured creditors will limit the ability to restructure companies, it seems safe to assume that the relatively comfortable position that secured creditors currently enjoy during insolvency proceedings in the Netherlands will be under fire due to the proposals for a new bankruptcy code. Copyright © 2008 John Wiley & Sons, Ltd.