Multiple lenders and corporate distress: evidence on debt restructuring : [Version Juni 2006]

  • In the recent theoretical literature on lending risk, the coordination problem in multi-creditor 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.

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Author:Antje BrunnerGND, Jan Pieter KrahnenORCiDGND
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2001,04
Series (Serial Number):CFS working paper series (2001, 04 [Juni 2006])
Document Type:Working Paper
Year of Completion:2006
Year of first Publication:2006
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2006/07/13
Tag:bank lending; coordination risk; distress; workout
GND Keyword:Deutschland; Debt-equity swap; Debt-nature swap; Umschuldung; Kreditrisiko; Bank; Gläubiger; Unternehmenskooperation; Unternehmenszusammenschluss; Krisenmanagement; Unternehmenssanierung; Schätzung
Issue:Version Juni 2006
Page Number:41
CFS working paper ; 2001,04 Version vom Juni 2006, Erste Version: Februar 2001
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht