IS THE SPECIAL JUDICIAL RECOVERY PROCEDURE MORE ADVANTAGEOUS THAN THE ORDINARY PROCEDURE? A GAME THEORY PERSPECTIVE

Abstract

Given their economic importance, small businesses enjoy several legal benefits. Among those benefits, Brazilian bankruptcy law has a special judicial recovery procedure for them that, although it was created to be less expensive and complex that the ordinary procedure, it is severally criticized by renowned authors of the field, especially regarding its bankruptcy plan confirmation procedure. To test whether its confirmation procedure is less or more favorable, we've used a game theory model called "chicken game" to model the incentive structure of both creditors and the debtor. It was therefore observed that, contrary to what one might imagine, ceteris paribus, without the possibility to negotiate the bankruptcy plan, it's more likely that a bankruptcy plan more favorable to the debtor's interest be confirmed in the special procedure, than in the ordinary one.