Sizing up Corporate Restructuring in the COVID Crisis

Robin Greenwood, Benjamin Iverson and David Thesmar

No 28104, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In the wake of the COVID-19 pandemic, the financial and legal system will need to deal with a surge of financial distress in the business sector. Some firms will be able to survive, while others will face bankruptcy and thus need to be liquidated or reorganized. Many surviving firms will need to be downsized or acquired. In normal times, this triage is supported by the court system, banks, and financial markets. The goal of this paper is to size up the coming surge of financial distress, list the challenges it presents in the current environment, and analyze potential policy solutions. Overall, our analysis suggests that the two key issues will be court congestion and excess liquidation and failure of small firms.

JEL-codes: D22 G33 G38 (search for similar items in EconPapers)
Date: 2020-11
New Economics Papers: this item is included in nep-ore
Note: CF
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Citations: View citations in EconPapers (23)

Published as Robin Greenwood & Ben Iverson & David Thesmar, 2020. "Sizing Up Corporate Restructuring in the COVID-19 Crisis," Brookings Papers on Economic Activity, vol 2020(3), pages 391-441.

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