Distressed Debt Restructuring in the Presence of Credit Default Swaps

Mascia Bedendo (), Lara Cathcart and Lina El-Jahel
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Mascia Bedendo: Audencia Business School
Lina El-Jahel: University of Auckland Business School [New Zealand]

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Abstract: The availability of credit insurance via credit default swaps has been closely associated with the emergence of empty creditors. We empirically investigate this issue by looking at the debt restructurings (distressed exchanges and bankruptcy filings) of rated, nonfinancial U.S. companies over the period January 2007–June 2011. Using different proxies for the existence of insured creditors, we do not find evidence that the access to credit insurance favors bankruptcy over a debt workout. However, we document higher recovery prices following a distressed exchange in firms where empty creditors are more likely to emerge.

Keywords: Credit default swaps; Empty creditors; Debt restructuring (search for similar items in EconPapers)
Date: 2016-01
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Citations: View citations in EconPapers (19)

Published in Journal of Money, Credit and Banking, 2016, 48 (1), pp.165-201. ⟨10.1111/jmcb.12294⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01262323

DOI: 10.1111/jmcb.12294

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