Resource title

Corporate debt restructuring: evidence on lender coordination in financial distress

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Resource description

In the recent theoretical literature on lending risk, the coordination problem in multicreditor relationships have been analyzed extensively. We address this topic empirically, relying on a unique panel data set that includes detailed credit-file information on distressed lending relationships in Germany. In particular, it includes information on creditor pools, a legal institution aiming at coordinating lender interests in borrower distress. We report three major findings. First, the existence of creditor pools increases the probability of workout success. Second, the results are consistent with coordination costs being positively related to pool size. Third, major determinants of pool formation are found to be the number of banks, the distribution of lending shares, and the severity of the distress shock.

Resource author

Antje Brunner, Jan Pieter Krahnen

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/25375

Resource license

Adapt according to the presented license agreement and reference the original author.