Judicial Impact on Bankruptcy Efficiency: An Empirical Analysis of Case Duration in Serbian Bankruptcy Liquidations
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Abstract
This paper examines how judges shape the efficiency of liquidation proceedings, using case duration as a central indicator of procedural performance. Drawing on a dataset of over 1,300 closed bankruptcy liquidation cases in Serbia from 2010 to 2024, we apply hierarchical and cross-classified random-effects models to quantify the influence of judges, courts, and administrators, while controlling for case-level characteristics such as estate size, case complexity, contested claims, and debtor type. The analysis reveals substantial variation in case duration attributable to both judges and administrators, with administrators emerging as particularly influential in the cross-classified specifications. Moreover, we assess whether specific judge–administrator pairings systematically affect outcomes beyond their individual effects. While interaction effects are modest, they account for additional variation in procedural efficiency. The results highlight the importance of operational capacity and coordination between key institutional actors, offering evidence that agent-level discretion, beyond the legal framework, plays a role in shaping case trajectories. These findings contribute to the literature on judicial behavior, bankruptcy governance, and institutional performance in transitional legal systems.
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References
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Bergström, C., Eisenberg, T., Sundgren, S., & Wells, M. T. (2005). The Fate of Firms: Explaining Mergers and Bankruptcies. Journal of Empirical Legal Studies, 2(1), 49–85. https://doi.org/10.1111/j.1740-1461.2005.00031.x
Blazy, R., Chopard, B., Fimayer, A., & Guigou, J.-D. (2011). Employment preservation vs. creditors’ repayment under bankruptcy law: The French dilemma? International Review of Law and Economics, 31(2), 126–141. https://doi.org/10.1016/j.irle.2011.03.002
Blazy, R., & Esquerré, S. (2021). The CV effect: To what extent does the chance to reorganize depend on a bankruptcy judge’s profile? International Review of Law and Economics, 66, 105984. https://doi.org/10.1016/j.irle.2021.105984
Blazy, R., & Nigam, N. (2019). Corporate insolvency procedures in England: the uneasy case for liquidations. European Journal of Law and Economics, 47(1), 89–123. https://doi.org/10.1007/s10657-018-9599-2
Blazy, R., & Stef, N. (2020). Bankruptcy procedures in the post-transition economies. European Journal of Law and Economics, 50(1), 7–64. https://doi.org/10.1007/s10657-019-09634-5
Bris, A., Welch, I., & Zhu, N. (2006). The Costs of Bankruptcy: Chapter 7 Liquidation versus Chapter 11 Reorganization. The Journal of Finance, 61(3), 1253–1303. https://doi.org/10.1111/j.1540-6261.2006.00872.x
Cepec, J., Grajzl, P., & Zajc, K. (2017). Do liquidation trustee characteristics matter for firm liquidation outcomes? Evidence from Slovenia. Economic Systems, 41(4), 591–609. https://doi.org/10.1016/j.ecosys.2017.05.002
Chang, T., & Schoar, A. (2011). Judge Specific Differences in Chapter 11 and Firm Outcomes. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.997632
Claessens, S., & Klapper, L. F. (2005). Bankruptcy around the World: Explanations of Its Relative Use. American Law and Economics Review, 7(1), 253–283. https://doi.org/10.1093/aler/ahi004
Couwenberg, O., & de Jong, A. (2008). Costs and recovery rates in the Dutch liquidation-based bankruptcy system. European Journal of Law and Economics, 26(2), 105–127. https://doi.org/10.1007/s10657-008-9058-6
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Dewaelheyns, N., & Van Hulle, C. (2009). Filtering speed in a Continental European reorganization procedure. International Review of Law and Economics, 29(4), 375–387. https://doi.org/10.1016/j.irle.2009.03.005
Djankov, S., Hart, O., McLiesh, C., & Shleifer, A. (2008). Debt enforcement around the world. Journal of Political Economy, 116(6). https://doi.org/10.1086/595015
Eisenberg, T., & LoPucki, L. M. (1999). Shopping for Judges: An Empirical Analysis of Venue Choice in Large Chapter 11 Reorganizations. Cornell Law Review, 84(4), 967–1003.
Ferris, S. P., & Lawless, R. M. (1997). Professional Fees and Other Direct Costs in Chapter 7 Business Liquidations. Washington University Law Quarterly, 75(3).
Ferris, S. P., & Lawless, R. M. (2000). The Expenses of Financial Distress: the Direct Costs of Chapter 11. University of Pittsburgh Law Review, 61(1), 629–669.
Franks, J. R., & Torous, W. N. (1989). An Empirical Investigation of U.S. Firms in Reorganization. The Journal of Finance, 44(3), 747–769. https://doi.org/10.1111/j.1540-6261.1989.tb04389.x
Garrido, J., Bergthaler, W., DeLong, C., Johnson, J., Rasekh, A., Rosha, A., & Stetsenko, N. (2019). The Use of Data in Assessing and Designing Insolvency Systems. IMF Working Papers, 19(27). https://doi.org/10.5089/9781484396223.001
Grotti, R., & Cutuli, G. (2018). xtpdyn: A community-contributed command for fitting dynamic random-effects probit models with unobserved heterogeneity. Stata Journal, 18(4), 844–862. https://doi.org/10.1177/1536867x1801800406
He, D., Kai, Y., & and Wu, J. (2020). Industry characteristics, court location, and bankruptcy resolution. Journal of Management Analytics, 7(3), 389–423. https://doi.org/10.1080/23270012.2020.1715272
Heck, R., Heck, R. H., Thomas, S. L., & Thomas, S. L. (2020). An Introduction to Multilevel Modeling Techniques MLM and SEM Approaches (4th ed.). Routledge. https://doi.org/10.4324/9780429060274
Hox, J. J., Moerbeek, M., & van de Schoot, R. (2017). Multilevel Analysis: Techniques and Applications (3rd ed.). Routledge. https://doi.org/10.4324/9781315650982
Iverson, B. (2017). Get in Line: Chapter 11 Restructuring in Crowded Bankruptcy Courts. Management Science, 64(11), 5370–5394. https://doi.org/10.1287/mnsc.2017.2808
Iverson, B., Madsen, J., Wang, W., & Xu, Q. (2023). Financial Costs of Judicial Inexperience: Evidence From Corporate Bankruptcies. Journal of Financial and Quantitative Analysis, 58(3), 1111–1143. https://doi.org/DOI: 10.1017/S002210902200062X
Lambert-Mogiliansky, A., Sonin, K., & Zhuravskaya, E. (2007). Are Russian commercial courts biased? Evidence from a bankruptcy law transplant. Journal of Comparative Economics, 35(2), 254–277. https://doi.org/10.1016/j.jce.2007.03.009
LoPucki, L. M., & Doherty, J. W. (2004). The Determinants of Professional Fees in Large Bankruptcy Reorganization Cases. Journal of Empirical Legal Studies, 1(1), 111–141. https://doi.org/10.1111/j.1740-1461.2004.00004.x
Melcarne, A., & Ramello, G. B. (2020). Bankruptcy delay and firms’ dynamics. Small Business Economics, 54(2). https://doi.org/10.1007/s11187-018-0041-5
Mundlak, Y. (1978). On the Pooling of Time Series and Cross Section Data. Econometrica, 46(1), 69–85. https://doi.org/10.2307/1913646
Nash, J. R., & Pardo, R. I. (2012). Does Ideology Matter in Bankruptcy - Voting Behavior on the Courts of Appeals. William and Mary Law Review, 53(3), 919–986.
Rabe-Hesketh, S., & Skrondal, A. (2022). Multilevel and longitudinal modeling using Stata - Volume I: Continious Responses. Stata Press.
Rachlinski, J. J., Guthrie, C., & Wistrich, A. J. (2006). Inside the Bankruptcy Judge’s Mind Symposium: The Role of the Judge in the Twenty-First Century. Boston University Law Review, 86(5), 1227–1266.
Rachlinski, J. J., Guthrie, C., & Wistrich, A. J. (2007). Heuristics and Biases in Bankruptcy Judges. Journal of Institutional and Theoretical Economics (JITE) / Zeitschrift Für Die Gesamte Staatswissenschaft, 163(1), 167–186.
Radović, V., & Radulović, B. (2018). Prearranged Reorganization Plans in Serbia: Form Over Substance. European Business Organization Law Review, 19(2), 393–413. https://doi.org/10.1007/s40804-018-0099-1
Radulović, B., & Radović, M. (2020). Bias and predictability in judicial decisions involving corporate restructuring: Evidence from Serbia. Anali Pravnog Fakulteta u Beogradu, 68(2). https://doi.org/10.5937/analipfb2002080r
Snijders, T. A. B., & Bosker, R. J. (2012). Multilevel Analysis: An Introduction to Basic and Advanced Multilevel Modeling (2nd ed.). Sage Publishers.
Stripp, S. A. (1992). An Analysis of the Role of the Bankruptcy and the Use of Judicial Time. Seton Hall Law Review, 23(4), 1329–1466.
Teichman, D., & Zamir, E. (2014). Judicial decision-making: A behavioral perspective. In E. Zamir & D. Teichman (Eds.), The Oxford handbook of behavioral economics and the law. (pp. 664–702). Oxford University Press. https://doi.org/10.1093/oxfordhb/9780199945474.013.0026
Thorburn, K. S. (2000). Bankruptcy auctions: costs, debt recovery, and firm survival. Journal of Financial Economics, 58(3), 337–368. https://doi.org/10.1016/S0304-405X(00)00075-1
Bergström, C., Eisenberg, T., & Sundgren, S. (2004). On the design of efficient priority rules for secured creditors: Empirical evidence from a change in law. European Journal of Law and Economics, 18(3). https://doi.org/10.1007/s10657-004-4274-1
Bergström, C., Eisenberg, T., Sundgren, S., & Wells, M. T. (2005). The Fate of Firms: Explaining Mergers and Bankruptcies. Journal of Empirical Legal Studies, 2(1), 49–85. https://doi.org/10.1111/j.1740-1461.2005.00031.x
Blazy, R., Chopard, B., Fimayer, A., & Guigou, J.-D. (2011). Employment preservation vs. creditors’ repayment under bankruptcy law: The French dilemma? International Review of Law and Economics, 31(2), 126–141. https://doi.org/10.1016/j.irle.2011.03.002
Blazy, R., & Esquerré, S. (2021). The CV effect: To what extent does the chance to reorganize depend on a bankruptcy judge’s profile? International Review of Law and Economics, 66, 105984. https://doi.org/10.1016/j.irle.2021.105984
Blazy, R., & Nigam, N. (2019). Corporate insolvency procedures in England: the uneasy case for liquidations. European Journal of Law and Economics, 47(1), 89–123. https://doi.org/10.1007/s10657-018-9599-2
Blazy, R., & Stef, N. (2020). Bankruptcy procedures in the post-transition economies. European Journal of Law and Economics, 50(1), 7–64. https://doi.org/10.1007/s10657-019-09634-5
Bris, A., Welch, I., & Zhu, N. (2006). The Costs of Bankruptcy: Chapter 7 Liquidation versus Chapter 11 Reorganization. The Journal of Finance, 61(3), 1253–1303. https://doi.org/10.1111/j.1540-6261.2006.00872.x
Cepec, J., Grajzl, P., & Zajc, K. (2017). Do liquidation trustee characteristics matter for firm liquidation outcomes? Evidence from Slovenia. Economic Systems, 41(4), 591–609. https://doi.org/10.1016/j.ecosys.2017.05.002
Chang, T., & Schoar, A. (2011). Judge Specific Differences in Chapter 11 and Firm Outcomes. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.997632
Claessens, S., & Klapper, L. F. (2005). Bankruptcy around the World: Explanations of Its Relative Use. American Law and Economics Review, 7(1), 253–283. https://doi.org/10.1093/aler/ahi004
Couwenberg, O., & de Jong, A. (2008). Costs and recovery rates in the Dutch liquidation-based bankruptcy system. European Journal of Law and Economics, 26(2), 105–127. https://doi.org/10.1007/s10657-008-9058-6
Dalton, T., & Singer, J. M. (2014). Bigger Isn’t Always Better: An Analysis of Court Efficiency Using Hierarchical Linear Modeling. Pace Law Review, 34(2), 1169–1189. https://doi.org/10.58948/2331-3528.1869
Dewaelheyns, N., & Van Hulle, C. (2009). Filtering speed in a Continental European reorganization procedure. International Review of Law and Economics, 29(4), 375–387. https://doi.org/10.1016/j.irle.2009.03.005
Djankov, S., Hart, O., McLiesh, C., & Shleifer, A. (2008). Debt enforcement around the world. Journal of Political Economy, 116(6). https://doi.org/10.1086/595015
Eisenberg, T., & LoPucki, L. M. (1999). Shopping for Judges: An Empirical Analysis of Venue Choice in Large Chapter 11 Reorganizations. Cornell Law Review, 84(4), 967–1003.
Ferris, S. P., & Lawless, R. M. (1997). Professional Fees and Other Direct Costs in Chapter 7 Business Liquidations. Washington University Law Quarterly, 75(3).
Ferris, S. P., & Lawless, R. M. (2000). The Expenses of Financial Distress: the Direct Costs of Chapter 11. University of Pittsburgh Law Review, 61(1), 629–669.
Franks, J. R., & Torous, W. N. (1989). An Empirical Investigation of U.S. Firms in Reorganization. The Journal of Finance, 44(3), 747–769. https://doi.org/10.1111/j.1540-6261.1989.tb04389.x
Garrido, J., Bergthaler, W., DeLong, C., Johnson, J., Rasekh, A., Rosha, A., & Stetsenko, N. (2019). The Use of Data in Assessing and Designing Insolvency Systems. IMF Working Papers, 19(27). https://doi.org/10.5089/9781484396223.001
Grotti, R., & Cutuli, G. (2018). xtpdyn: A community-contributed command for fitting dynamic random-effects probit models with unobserved heterogeneity. Stata Journal, 18(4), 844–862. https://doi.org/10.1177/1536867x1801800406
He, D., Kai, Y., & and Wu, J. (2020). Industry characteristics, court location, and bankruptcy resolution. Journal of Management Analytics, 7(3), 389–423. https://doi.org/10.1080/23270012.2020.1715272
Heck, R., Heck, R. H., Thomas, S. L., & Thomas, S. L. (2020). An Introduction to Multilevel Modeling Techniques MLM and SEM Approaches (4th ed.). Routledge. https://doi.org/10.4324/9780429060274
Hox, J. J., Moerbeek, M., & van de Schoot, R. (2017). Multilevel Analysis: Techniques and Applications (3rd ed.). Routledge. https://doi.org/10.4324/9781315650982
Iverson, B. (2017). Get in Line: Chapter 11 Restructuring in Crowded Bankruptcy Courts. Management Science, 64(11), 5370–5394. https://doi.org/10.1287/mnsc.2017.2808
Iverson, B., Madsen, J., Wang, W., & Xu, Q. (2023). Financial Costs of Judicial Inexperience: Evidence From Corporate Bankruptcies. Journal of Financial and Quantitative Analysis, 58(3), 1111–1143. https://doi.org/DOI: 10.1017/S002210902200062X
Lambert-Mogiliansky, A., Sonin, K., & Zhuravskaya, E. (2007). Are Russian commercial courts biased? Evidence from a bankruptcy law transplant. Journal of Comparative Economics, 35(2), 254–277. https://doi.org/10.1016/j.jce.2007.03.009
LoPucki, L. M., & Doherty, J. W. (2004). The Determinants of Professional Fees in Large Bankruptcy Reorganization Cases. Journal of Empirical Legal Studies, 1(1), 111–141. https://doi.org/10.1111/j.1740-1461.2004.00004.x
Melcarne, A., & Ramello, G. B. (2020). Bankruptcy delay and firms’ dynamics. Small Business Economics, 54(2). https://doi.org/10.1007/s11187-018-0041-5
Mundlak, Y. (1978). On the Pooling of Time Series and Cross Section Data. Econometrica, 46(1), 69–85. https://doi.org/10.2307/1913646
Nash, J. R., & Pardo, R. I. (2012). Does Ideology Matter in Bankruptcy - Voting Behavior on the Courts of Appeals. William and Mary Law Review, 53(3), 919–986.
Rabe-Hesketh, S., & Skrondal, A. (2022). Multilevel and longitudinal modeling using Stata - Volume I: Continious Responses. Stata Press.
Rachlinski, J. J., Guthrie, C., & Wistrich, A. J. (2006). Inside the Bankruptcy Judge’s Mind Symposium: The Role of the Judge in the Twenty-First Century. Boston University Law Review, 86(5), 1227–1266.
Rachlinski, J. J., Guthrie, C., & Wistrich, A. J. (2007). Heuristics and Biases in Bankruptcy Judges. Journal of Institutional and Theoretical Economics (JITE) / Zeitschrift Für Die Gesamte Staatswissenschaft, 163(1), 167–186.
Radović, V., & Radulović, B. (2018). Prearranged Reorganization Plans in Serbia: Form Over Substance. European Business Organization Law Review, 19(2), 393–413. https://doi.org/10.1007/s40804-018-0099-1
Radulović, B., & Radović, M. (2020). Bias and predictability in judicial decisions involving corporate restructuring: Evidence from Serbia. Anali Pravnog Fakulteta u Beogradu, 68(2). https://doi.org/10.5937/analipfb2002080r
Snijders, T. A. B., & Bosker, R. J. (2012). Multilevel Analysis: An Introduction to Basic and Advanced Multilevel Modeling (2nd ed.). Sage Publishers.
Stripp, S. A. (1992). An Analysis of the Role of the Bankruptcy and the Use of Judicial Time. Seton Hall Law Review, 23(4), 1329–1466.
Teichman, D., & Zamir, E. (2014). Judicial decision-making: A behavioral perspective. In E. Zamir & D. Teichman (Eds.), The Oxford handbook of behavioral economics and the law. (pp. 664–702). Oxford University Press. https://doi.org/10.1093/oxfordhb/9780199945474.013.0026
Thorburn, K. S. (2000). Bankruptcy auctions: costs, debt recovery, and firm survival. Journal of Financial Economics, 58(3), 337–368. https://doi.org/10.1016/S0304-405X(00)00075-1