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| Tekijä: | GERTNER, R. SCHARFSTEIN, D. |
| Otsikko: | A theory of workouts and the effects of reorganization law |
| Lehti: | Journal of Finance
1991 : SEP, VOL. 46:4, p. 1189-1222 |
| Asiasana: | BUSINESS FAILURES USA FINANCIAL MODELS DEBT MANAGEMENT |
| Kieli: | eng |
| Tiivistelmä: | A model of a financially distressed firm with outstanding bank debt and public debt is presented. Coordination problems among public debtholders introduce investment ineffeciencies in the workout process. In most cases, these inefficiencies are not mitigated by the ability of firms to buy back their public debt with cash and other securities - the only feasible way that firms can restructure their public debt. It is shown that Chapter 11 reorganization law increases investment, and the types of corporate financial structures for which this increased investment enhances efficiency, are characterized. |
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