Bank Debt Restructuring under Belgian Court-Supervised Reorganization

B. Leyman () and Koen Schoors

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: We use a unique dataset to analyze the contract renegotiation between a debtor and its secured bank creditors during Belgian court-supervised reorganization. We find that secured banks with higher collateralization succeed in renegotiating higher debt repayments during the court-supervised post-confirmation stage. There is also mild evidence that secured bank creditors renegotiate higher loan repayments during the court-supervised post-confirmation stage if the debtor’s assets are more redeployable. The proceeds of asset sales are used to generously repay secured banks and there is some evidence that secured banks push for those sales. Our findings are consistent with theory suggesting that secured creditors prefer liquidation above court-supervised reorganization.

Keywords: Bankruptcy; bank lending; collateral; liquidation rights (search for similar items in EconPapers)
JEL-codes: G10 G20 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2008-04
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-cta and nep-reg
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:08/508

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