Handbook of Empirical Corporate Finance

Chapter 14 BANKRUPTCY AND THE RESOLUTION OF FINANCIAL DISTRESS^*

EDITH S. HOTCHKISS

Boston College

KOSE. JOHN

New York University

ROBERT M. MOORADIAN

Northeastern University

KARIN S. THORBURN

Dartmouth College

Contents

Abstract

Keywords

1. Introduction

2. Theoretical framework

2.1. Restructuring of assets and financial contracts

2.2. Efficiency issues in recontracting

2.3. Rules and procedures of the U.S. bankruptcy code

2.4. The choice between private and court-supervised restructuring

3. Asset restructuring

3.1. Frequency and determinants of asset sales

3.2. Do “fire sales” of assets exist?

4. Debt workouts

4.1. The choice between out-of-court restructuring and formal bankruptcy

4.2. Characteristics of debt restructurings

5. Governance ...