BibTex format
@article{Bedendo:2010,
author = {Bedendo, M and Cathcart, L and El-Jahel, L},
journal = {Working Paper, SSRN},
title = {In-and Out of Court Debt Restructuring in the Presence of Credit Default Swaps},
year = {2010}
}
Publications
Citation
RIS format (EndNote, RefMan)
TY - JOUR
AB - This paper empirically investigates whether the availability of credit insurance via credit default swaps (CDS) affects the debt restructuring process of distressed firms, as predicted by the empty creditors theory. Looking at the restructuring outcome (distressed exchanges versus Chapter 11 filings) of a sample of rated, non-financial U.S. companies during the 2008-2009 crisis, we do not find evidence that the access to credit insurance favors bankruptcy over a debt workout. Instead, we observe that the probability of filing for Chapter 11 during the crisis is significantly associated with high leverage and short-term debt ratios, a simplified debt structure characterized by a high proportion of secured debt, and large profitability shocks incurred by the main banks lending to the company. Further checks on the determinants of the recovery values and on the characteristics of debt renegotiations confirm that the presence of CDS does not seem to have significant distortive effects on the debt restructuring process.
AU - Bedendo,M
AU - Cathcart,L
AU - El-Jahel,L
PY - 2010///
TI - In-and Out of Court Debt Restructuring in the Presence of Credit Default Swaps
T2 - Working Paper, SSRN
ER -