The dynamics of bankruptcy of companies as a result of ‘Punctuated Equilibrium’ events
When companies go bankrupt, it is incorrect to assume that all its activities cease. Normally, part of their business that are healthy either emerge from bankruptcy as a much smaller enterprise or are absorbed into different companies.
Such dynamics have a fundamental role to play in the resilience of the economic systems as well as within the micro level supply chain. It is not unusual for buyers and suppliers to make to necessary efforts to preserve the partial viability of the bankrupt business in order to preserve or minimise the impact to the original chain.
We are currently developing a method that structure companies to be equivalent to nested organisms where bankruptcy does not necessarily eliminates a company in its totality. Instead its nested organisms are released into the wider environment as new companies. When comparing to real data, we hope will be able to better understand the impact of such dynamics to the resilience of the economic systems.