Determinants of financial distress and bankruptcy in highly levered transactions

Paul Halpern, Robert Kieschnick and Wendy Rotenberg

The Quarterly Review of Economics and Finance, 2009, vol. 49, issue 3, pages 772-783

Abstract: Prior literature on highly levered transactions (levered buyouts or levered recapitalizations) has emphasized either changes in governance or the structuring of their financing in helping these firms avoid financial distress or bankruptcy. Observing a sample of HLTs over time, we observe that debt composition is a more critical influence than proposed changes in governance for the likelihood of an HLT avoiding financial distress or bankruptcy. Such evidence is consistent with the [Chemmanur, T. & Fulghieri, P. (1994). Reputation, renegotiation, and the choice between bank loans and publicly traded debt. Review of Financial Studies 7, 475-506] model and suggests that the critical factor is the ability to informally renegotiate debt terms with a few lenders.

Keywords: Bankruptcy; Financial; distress; HLT; Levered; buyouts; Levered; recapitalizations (search for similar items in EconPapers)
Date: 2009

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6W5X ... 61c9aff1a8ad31216794
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eee:quaeco:v:49:y:2009:i:3:p:772-783

Access Statistics for this article

The Quarterly Review of Economics and Finance is edited by R. J. Arnould and J. E. Finnerty

More articles in The Quarterly Review of Economics and Finance from Elsevier
Series data maintained by Heidi Boesdal ().