Work

Distressed Debt Restructuring in the Presence of Credit Default Swaps

Year: 2016

Type: article

Abstract: The availability of credit insurance via credit default swaps has been closely associated with the emergence of empty creditors. We empirically investigate this issue by looking at the debt restructurings (distressed exchanges and bankruptcy filings) of rated, nonfinancial U.S. companies over the period January 2007–June 2011. Using different proxies for the existence of insured creditors, we do not find evidence that the access to credit insurance favors bankruptcy over a debt workout. However, we document higher recovery prices following a distressed exchange in firms where empty creditors are more likely to emerge.

Source: Journal of money credit and banking

DOI: 10.1111/jmcb.12294

Authors: MASCIA BEDENDO, LARA CATHCART, LINA EL-JAHEL

Institutions: Audencia Business School, Imperial College London, University of Auckland

Language: English

Topic: Corporate Insolvency and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,800

Funder: Centre for Applied Research in Finance