Explaining the choice between alternative insolvency regimes for troubled companies in the UK and Sweden

Over the past 20 years UK and Swedish insolvency law has moved in the direction of company rescue rather than enforcing secured creditor priority. However, both countries show a low take up rate of rescue procedures. This paper uses a cost-benefit approach to examine the choices faced by key stakeholders using the now conventional transaction cost paradigm. The paper argues that it is predominantly the ex post indirect and time costs which explain the poor take up of customised rescue procedures. In both countries the ex ante cost of delay in filing also presents a tough challenge not fully addressed by policymakers. JEL Classification K22