Out-of-Court Restructuring versus Formal Bankruptcy in a Non-Interventionist Bankruptcy Setting*
- 12 November 2009
- journal article
- Published by Oxford University Press (OUP) in European Finance Review
- Vol. 14 (4), 623-668
- https://doi.org/10.1093/rof/rfp022
Abstract
We investigate debt restructurings in Germany for a sample of 116 financially distressed companies. About half of the firms succeed in restructuring their debt in a workout while the others file for bankruptcy. Our evidence suggests that firms which have higher leverage, owe more debt to banks, and exhibit higher going concern values are more likely to conduct a workout. Bankruptcy is more likely for firms with deficient lender coordination and a high fraction of collateralized debt. An analysis of stock returns suggests that the market uses similar information to predict workouts. 84% of the bankrupt firms were ultimately liquidated.This publication has 40 references indexed in Scilit:
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