Does court-supervised reorganization work? Evidence from post-confirmation firm failure

Unlike the US Chapter 11, the Belgian reorganization legislation requires that distressed firms remain temporarily under court-supervision during the post-confirmation stage. Using a hand-collected sample of firms, we analyze the likelihood of business failure and the time to failure during this period. Less viable firms are more likely to fail and do faster so, indicating relatively effective reorganization proceedings. Firms that are indebted to highly secured banks or owe high sums of unpaid taxes are more likely to fail. Judicial discretion affects the likelihood of failure only in a subsample of sole proprietorships.