Remuneration of Bankruptcy Administrators. Between Economic Efficiency and Legal Responsibilities

Abstract

This article offers a comparative economic analysis of remuneration models for bankruptcy administrators, examining the extent to which current practices across jurisdictions align with the goals of efficiency and creditor protection. Drawing on law and (micro)economics methodology, the paper models two simplified systems of administrator compensation: one centralized, where remuneration is fixed and largely uncorrelated with outcomes, and one decentralized, where creditors direct litigation and administrator involvement. While the Swiss legal framework is used as an illustrative example, the models and findings are applicable to a broad range of legal systems that face similar structural and incentive-based challenges. The analysis suggests that decentralized approaches may offer greater economic efficiency by discouraging opportunistic behavior and better aligning administrator incentives with creditor outcomes. A hybrid system is proposed, integrating performance-based elements to enhance estate management.