Bankruptcy and the Resolution of Financial Distress

89 Pages Posted: 24 Jan 2008  

Edith S. Hotchkiss

Boston College - Carroll School of Management

Kose John

New York University (NYU) - Department of Finance

Karin S. Thorburn

Norwegian School of Economics; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Robert M. Mooradian

Northeastern University, D’Amore-McKim School of Business, Finance Area

Date Written: January 2008

Abstract

This paper reviews empirical research on the use of private and court-supervised mechanisms for resolving default and reorganizing companies in financial distress. Starting with a simple framework for financial distress and a quick overview of the theoretical research in this area, we proceed to summarize and synthesize the empirical research in the areas of financial distress, asset and debt restructuring, and features of the formal bankruptcy procedures in the US and around the world. Studies of out-of-court restructurings (workouts and exchange offers), corporate governance issues relating to distressed restructurings, and the magnitude of the costs and the efficiency of bankruptcy reorganizations are among the topics covered.

Keywords: Bankruptcy, financial distress, bankruptcy costs, fire-sales, bankruptcy auctions, reorganizations, Chapter 11

JEL Classification: G33

Suggested Citation

Hotchkiss, Edith S. and John, Kose and Thorburn, Karin S. and Mooradian, Robert M., Bankruptcy and the Resolution of Financial Distress (January 2008). Available at SSRN: https://ssrn.com/abstract=1086942 or http://dx.doi.org/10.2139/ssrn.1086942

Edith S. Hotchkiss

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Department of Finance Fulton Hall, Room 330
Chestnut Hill, MA 02467
United States
617-552-3240 (Phone)
617-552-0431 (Fax)

Kose John

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
212-998-0337 (Phone)
212-995-4233 (Fax)

Karin S. Thorburn (Contact Author)

Norwegian School of Economics ( email )

Helleveien 30
N-5045 Bergen
Norway
+4755959283 (Phone)

HOME PAGE: http://www.nhh.no/cv/thorburn

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Robert M. Mooradian

Northeastern University, D’Amore-McKim School of Business, Finance Area ( email )

Boston, MA 02115
United States
617-373-5955 (Phone)
617-373-8798 (Fax)

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