Bankruptcy Law and the Canadian Experience: An Economic Appraisal

The present paper offers an overview of the Canadian bankruptcy system and looks at the different roles a bankruptcy law should play--that is avoiding a common property problem, respecting pre-bankruptcy entitlements, and increasing the flow of information between all parties in order to eliminate inefficient firms. Statistical evidence on the use of liquidation and reorganization procedures and on the characteristics of firms using each procedure are supplied. Finally, the author looks at the rationale and the possible impact of some proposed amendments to the Canadian Bankruptcy Act