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

Research output: Contribution to journalJournal article

Published

Journal publication date05/2012
JournalInternational Small Business Journal
Journal number3
Volume30
Number of pages19
Pages275-293
Original languageEnglish

Abstract

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.