Bankruptcy protection duration and outcome of Canadian public firms

Purpose The purpose of this paper is to investigate the determinants of bankruptcy protection duration of Canadian public firms, and also investigate the duration for various bankruptcy outcomes including the liquidation and re-emergence of bankrupt firms. Design/methodology/approach This study uses data on all Canadian public firms that applied for bankruptcy protection over the period 1992-2014. The authors mainly apply duration and survival analyses to draw the main conclusions. Findings The authors find that larger and older firms with more complicated structures and issues to settle tend to remain under protection from creditors longer, and also ascertain that the fate of relatively successful companies is determined faster. Moreover, the authors report that it takes less time to achieve a final solution for firms under bankruptcy protection when interest rates are increasing and the term spread is high. Finally, firms that file for protection under the Companies' Creditors Arrangement Act (CCAA) spend longer restructuring than firms that file under the Bankruptcy and Insolvency Act. Originality/value To the authors; knowledge, this is the first paper that investigates the Canadian bankruptcy protection duration. It uses the unique Canadian framework to infer the determinants of bankruptcy protection duration and bankrupt firms' outcomes.