'Bank' Loan Ownership and Troubled Debt Restructurings

52 Pages Posted: 7 May 2013

See all articles by Cem Demiroglu

Cem Demiroglu

Koc University, College of Administrative Sciences and Economics

Christopher M. James

University of Florida - Department of Finance, Insurance and Real Estate

Date Written: April 15, 2013

Abstract

This paper examines whether the number and type of lenders that participate in loan facilities are related to the nature of the troubled debt restructuring process. Using a hand-collected sample of debt restructurings both outside and within bankruptcy, we find that the likelihood of a successful out of court restructuring is significantly related to the identity of the firm's lenders. Overall, we find evidence that loans from traditional bank lenders are much easier to restructure out of court than loans from institutional lenders. Moreover, we find evidence that securitized commercial loans are more difficult to restructure due to holdout problems than publicly traded debt. Consistent with greater holdout problems in the institutional loan market, we find that reliance on institutional loans is positively related to the likelihood of a prepackaged bankruptcy.

Keywords: financial distress, troubled debt, debt restructuring, bankruptcy, securitization, institutional loans, holdout problems

JEL Classification: G21, G32, G33

Suggested Citation

Demiroglu, Cem and James, Christopher M., 'Bank' Loan Ownership and Troubled Debt Restructurings (April 15, 2013). Available at SSRN: https://ssrn.com/abstract=2261159 or http://dx.doi.org/10.2139/ssrn.2261159

Cem Demiroglu (Contact Author)

Koc University, College of Administrative Sciences and Economics ( email )

Koc University
Sariyer
Istanbul, 34450
Turkey
90-212-338-1620 (Phone)
90-212-338-1653 (Fax)

HOME PAGE: http://https://sites.google.com/site/cemdemiroglu/

Christopher M. James

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainesville, FL 32611-7168
United States
352-392-3486 (Phone)
352-392-0301 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
145
Abstract Views
589
rank
59,929
PlumX Metrics