A COMPARISON OF FINANCIAL RECONTRACTING IN DISTRESSED EXCHANGES AND CHAPTER-11 REORGANIZATIONS

• 成果类型: Article
• 署名作者: FRANKS, JR; TOROUS, WN
• 署名单位: University of California System; University of California Los Angeles
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/0304-405X(94)90037-X
• 发表日期: 1994
• 页码: 349-370
• 关键词: DISTRESSED EXCHANGES; CHAPTER-11; EQUITY DEVIATIONS; Bankruptcy costs

摘要

We investigate the financial recontracting of firms completing distressed exchanges and those reorganizing under Chapter 11. We find that recovery rates for creditors, on average, are higher in distressed exchanges than in Chapter 11 reorganizations, as are equity deviations from absolute priority. The difference in deviations potentially provides valuable information on the higher costs of formal reorganization. Also, cash is used more extensively to redeem creditors' claims in Chapter 11 than in distressed exchanges. The greater use of cash can be attributed to provisions of the Bankruptcy Code that permit conservation of cash and facilitate asset sales.