A resource-based analysis of bankruptcy law, SMEs and corporate recovery

The UK Company Voluntary Arrangement (CVA) is an early example of a bankruptcy regime designed to aid the rescue of financially distressed SMEs. Its efficacy hinges on its application to aid only viable companies with liquidation as the preferred option for companies that are not viable. This articl...

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Bibliographic Details
Published inInternational small business journal Vol. 30; no. 3; pp. 275 - 293
Main Authors Cook, Gary A.S., Pandit, Naresh R, Milman, David
Format Journal Article
LanguageEnglish
Published London Sage Publications Ltd 01.05.2012
Subjects
Bankruptcy
Bankruptcy laws
Business studies
Corporate debt
Entrepreneurs
Entrepreneurship
Hypothesis
Law
Legislation
Liquidation
Small & medium sized enterprises-SME
Small and medium sized enterprises
Small business
Studies
Turnaround management
UK Company Voluntary Arrangement
United Kingdom
United Kingdom > UK
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Summary:The UK Company Voluntary Arrangement (CVA) is an early example of a bankruptcy regime designed to aid the rescue of financially distressed SMEs. Its efficacy hinges on its application to aid only viable companies with liquidation as the preferred option for companies that are not viable. This article proposes the resource-based view as a theoretical means to assess the viability of bankrupt SMEs. Seven hypotheses are tested and provide support for the central proposition, that a company which has resource strength, but is pushed into bankruptcy by temporary factors, is more likely to succeed in a CVA. The article concludes that the resource-based view is useful for analysing the viability of bankrupt companies and that well-designed bankruptcy law can promote SMEs and entrepreneurship.
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ISSN:0266-2426
1741-2870
DOI:10.1177/0266242611407409