Bailouts And Bankruptcies: Corporate Distress, Troubled Debt Restructurings And Equity Stripping
Author(s) Saibal Ghosh, Ashiana Salian


We investigate the debt restructuring process and outcomes for a sample of 483 firms that undergo corporate debt restructuring (CDR) between 2002 and 2013. 58 firms exit successfully, 71 are unsuccessful or withdrew and the rest await resolution. Firms that exit successfully are more profitable and less levered entering the CDR process and spend longer times in restructurings. Little net equity enters CDR firms, while there is some evidence of equity stripping, particularly in firms with greater promoter control. The lack of coordination between creditors and interestingly, across different bankruptcy forums, impedes restructuring. The changes in the types of firms entering the CDR process in recent years appears to indicate lower Kaplan-Meier survival rates, although the insufficient passage of time makes the conclusion tentative.

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