Debtor-in-possession financing and bankruptcy resolution: Empirical evidence

Dahiya, Sandeep; John, Kose; Puri, Manju; Ramı́rez, G.

doi:10.1016/s0304-405x(03)00113-2

Cited by 150 publications

(110 citation statements)

References 31 publications

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“…Dahiya et al (2003) highlight the possibility of debtor-in-possession financing. This type of secured financing for firms under Chapter 11 bankruptcy enables investments, thus increasing firms' chances for survival.…”

Section: Investmentsmentioning

confidence: 97%

Corporate distress and turnaround: integrating the literature and directing future research

Schweizer

Nienhaus

2017

Bus Res

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The topic of corporate distress and turnaround has been of interest to organizational change theory for many decades. This article considers existing reviews in discussing the current body of turnaround literature across multiple research fields and structures its work along a holistic framework. The numerous facets of corporate turnaround, resorting to general corporate restructuring research classifications, are clustered in a more detailed manner than those that merely rely on two commonly employed turnaround dimensions: ''retrenchment'' and ''recovery.'' The authors develop an agenda for future research based on this cross-disciplinary literature aggregation by highlighting current gaps and offering potential research questions. The review contributes to the understanding of corporate distress and turnaround by integrating different research streams. Additionally, the work emphasizes the need for further harmonization and operationalization in turnaround success metrics.

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Section: Investmentsmentioning

confidence: 97%

Corporate distress and turnaround: integrating the literature and directing future research

Schweizer

Nienhaus

2017

Bus Res

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“…In Table 7 Panel B, we explicitly recognize the endogeneity of DIP financing and using the covariates suggested as important for the DIP decision by Dahiya et al (2003), estimate a bivariate probit model with the probability of obtaining DIP financing and the probability of APD being the two outcome variables. We find that both the coefficient estimate (economic significance) and the statistical significance of the DIP variable has increased controlling for endogeneity issues.…”

Section: Firm Wide Evidencementioning

confidence: 99%

The Changing Nature of Chapter 11

2014

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The U.S. Chapter 11 bankruptcy system has long been viewed as debtor friendly, with frequency of absolute priority deviations (APD) in favor of equity holders commonplace, as high as 75%, before 1990. In the 1991-2005 period, we find a secular decline in the frequency of APD to 22%, with the frequency as low as 9% for the period 2000-2005. We identify the increasing importance of debtor-in-possession (DIP) financing and key employee retention plans (KERP) in bankruptcy as the key drivers of this secular decline. We also find management turnover in Chapter 11 has increased by 65% since 1990 and that APD are more likely when management has substantial share holdings in the firm. The time spent in bankruptcy has also declined from about 23 months before 1990 to 16 months after 2000. Collectively, these results are consistent with the thesis that Chapter 11 has increasingly become creditor friendly over the years. We discuss the implications of our results for models that assume that equity has a valuable dilatory option in the bankruptcy process.

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“…This database is commonly used in empirical studies on bank loans (eg Dahiya et al, 2003;Bharath et al, 2007;Qian and Strahan, 2007). We use loan data for the period January 2000 to December 2005 as it is the period with the best coverage for both loans and banks.…”

Section: Data and Variablesmentioning

confidence: 99%

Bank Competition and Collateral: Theory and Evidence

2012

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We investigate the impact of bank competition on the use of collateral in loan contracts. We develop a theoretical model incorporating information asymmetries in a spatial competition framework where banks choose between screening the borrower and asking for collateral. We show that presence of collateral is more likely when bank competition is low. We then test this prediction empirically on a sample of bank loans from 70 countries. We estimate logit models where the presence of collateral is regressed on bank competition, measured by the Lerner index. Our empirical tests corroborate the theoretical predictions that bank competition reduces the use of collateral. These findings survive several robustness checks. TiivistelmäTässä tutkimuksessa tarkastellaan pankkien välisen kilpailun vaikutuksia niiden myöntämien luottojen vakuuskäytäntöihin. Työn teoreettisen osan analyysi perustuu epäsymmetrisellä informaatiolla täydennettyyn spatiaalisen kilpailun malliin. Siinä pankit valintansa mukaan joko seulovat laina-asiakkaansa tai vaativat vakuuksia myöntämilleen lainoille. Mallin mukaan vakuuksien käyttö on todennä-köisempää, kun pankkien välinen kilpailu on vähäistä. Tätä mallin implikaatiota testataan työn empiirisessä osassa hyödyntämällä 70 maan aineistoa pankkien myöntämistä lainoista. Estimoivassa logit-mallissa pankkien vakuuksien käytön todennäköisyyttä selitetään pankkien välistä kilpailua mittaavalla ns. Lernerindeksillä. Estimointitulokset tukevat teoreettisen mallin keskeistä implikaatiota, että vakuuksien käyttö vähenee, kun pankkien välinen kilpailu kiristyy.Avainsanat: vakuudet, pankkien välinen kilpailu, epäsymmetrinen informaatio

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Debtor-in-possession financing and bankruptcy resolution: Empirical evidence

Cited by 150 publications

References 31 publications

Corporate distress and turnaround: integrating the literature and directing future research

Corporate distress and turnaround: integrating the literature and directing future research

The Changing Nature of Chapter 11

Bank Competition and Collateral: Theory and Evidence

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