Abstract

http://ssrn.com/abstract=1573311
 
 

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The Ownership and Trading of Debt Claims in Chapter 11 Restructurings


Victoria Ivashina


Harvard University; National Bureau of Economic Research (NBER)

Benjamin Charles Iverson


Northwestern University - Kellogg School of Management

David C. Smith


University of Virginia - McIntire School of Commerce

April 15, 2013

AFA 2011 Denver Meetings Paper

Abstract:     
Using novel data that has complete coverage of individual claims for 136 Chapter 11 bankruptcy protection filings and that includes detailed information on claims transfers, we provide the first empirical insight on how a firm’s ownership changes during the bankruptcy process and how these changes impact bankruptcy outcomes. Pre-bankruptcy ownership concentration is important for the coordination of a prearranged bankruptcy filing and is associated with a faster bankruptcy resolution and a higher likelihood of a successful reorganization. However, as the trading of claims in bankruptcy concentrates ownership further — in particular, through consolidation of ownership by hedge funds and other active investors — the probability of liquidation increases and recovery rates decrease.

Number of Pages in PDF File: 67

Keywords: Bankruptcy, Claims trading, Restructuring, Capital structure

JEL Classification: G23, G32, G33, G34

working papers series





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Date posted: March 19, 2010 ; Last revised: May 1, 2013

Suggested Citation

Ivashina, Victoria and Iverson, Benjamin Charles and Smith, David C., The Ownership and Trading of Debt Claims in Chapter 11 Restructurings (April 15, 2013). AFA 2011 Denver Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1573311 or http://dx.doi.org/10.2139/ssrn.1573311

Contact Information

Victoria Ivashina
Harvard University ( email )
Harvard Business School
Baker Library 233
Boston, MA 02163
United States
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Benjamin Charles Iverson
Northwestern University - Kellogg School of Management ( email )
Evanston, IL 60208
United States
David Carl Smith (Contact Author)
University of Virginia (UVA) - McIntire School of Commerce ( email )
P.O. Box 400173
Charlottesville, VA 22904-4173
United States
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