Publications
Publications
- 2024
Are Bankruptcy Professional Fees Excessively High?
By: Samuel Antill
Abstract
Chapter 7 is the most popular bankruptcy system for U.S. firms and individuals.
Chapter 7 professional fees are substantial. Theoretically, high fees might be an unavoidable cost of incentivizing professionals. I test this empirically. I study trustees, the most
important professionals in Chapter 7, who liquidate assets in exchange for legally-mandated
commissions. Exploiting kinks in the commission function, I estimate a structural model
of moral hazard by trustees. I show that a policy change lowering trustee fees would harm
trustee incentives, reducing liquidation values. Nonetheless, such a policy would dramatically
improve creditor recovery, increasing small-business-lender recovery by 15.7%.
Keywords
Citation
Antill, Samuel. "Are Bankruptcy Professional Fees Excessively High?" Working Paper, January 2024. (Conditionally Accepted, Review of Financial Studies.)