Corporate Debt Restructuring: Evidence on Lending Coordination in Financial Distress

Jan Krahnen () and Antje Brunner

No 3030, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyse the coordination problem in multi-creditor relationships empirically, relying on a unique panel data set that contains detailed credit-file information on distressed lending relationships in Germany, including 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.

Keywords: Bank lending; Distress; Workout; Coordination risk (search for similar items in EconPapers)
JEL-codes: D74 G21 G33 G34 (search for similar items in EconPapers)
Date: 2001-10
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Citations: View citations in EconPapers (10)

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