Abstract

http://ssrn.com/abstract=1493966
 
 

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Hedge Funds and Chapter 11


Wei Jiang


Columbia Business School - Finance and Economics

Kai Li


University of British Columbia (UBC) - Sauder School of Business; China Academy of Financial Research (CAFR)

Wei Wang


Queen's School of Business

April 19, 2011

Journal of Finance, Forthcoming

Abstract:     
This paper studies the presence of hedge funds in the Chapter 11 process and their effects on bankruptcy outcomes. Hedge funds strategically choose positions in the capital structure where their actions could have a bigger impact on value. Their presence, especially as unsecured creditors, helps balance power between the debtor and secured creditors. Their effect on the debtor manifests in higher probabilities of the latter’s loss of exclusive rights to file reorganization plans, CEO turnover, and adoptions of KERP, while their effect on secured creditors manifests in higher probabilities of emergence and payoffs to junior claims.

Number of Pages in PDF File: 58

Keywords: Hedge funds, Chapter 11, Loan-to-own, APR deviation, Creditor rights

JEL Classification: G23, G30, G33

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Date posted: October 29, 2009 ; Last revised: October 20, 2011

Suggested Citation

Jiang, Wei and Li, Kai and Wang, Wei, Hedge Funds and Chapter 11 (April 19, 2011). Journal of Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1493966

Contact Information

Wei Jiang
Columbia Business School - Finance and Economics ( email )
3022 Broadway
New York, NY 10027
United States
(212) 854-5553 (Phone)

Kai Li
University of British Columbia (UBC) - Sauder School of Business ( email )
2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8353 (Phone)
604-822-4695 (Fax)
HOME PAGE: http://finance.sauder.ubc.ca/~kaili
China Academy of Financial Research (CAFR)
1954 Huashan Road
Shanghai P.R.China, 200030
China

Wei Wang (Contact Author)
Queen's School of Business ( email )
143 Union Street
Kingston, Ontario K7L 3N6
Canada

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