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Bankruptcy Myths Debunked In Study

Law360 (September 27, 2006, 12:00 AM EDT) -- A new study by researchers at the Federal Reserve Board questions the correlation between the length of a bankruptcy case and how beneficial it is to the company and its creditors and finds that a faster bankruptcy is not necessarily more cost-effective.

“We find that bond recovery rates increase with time in the initial stage of a restructuring process and decrease only if a firm stays in bankruptcy for an extended period,” the researchers said.

“In the same spirit, the likelihood of a firm reentering bankruptcy...
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