In a paper published yesterday (link below), professors from The Hong Kong University of Science and Technology and the Queen’s School of Business at Queen’s University (Kingston, Ontario, Canada) provide the results of their study of key employee retention plans (or KERPs) instituted by large public companies that filed for chapter 11 bankruptcy protection in the United States between 1996 and 2007. The study covered 416 such companies, 39% of which adopted KERPs.
In the study, the authors conclude that “incentives provided under such plans improve bankruptcy outcomes for creditors along several dimensions”:
- increased likelihood of emergence,
- reduced bankruptcy duration, and
- fewer violations of the absolute priority rule.
A copy of the complete article can be found here: https://www.documentcloud.org/documents/408293-kerpaugust8.html