Distressed Debt

2019 ◽  
pp. 621-638
Author(s):  
Seoyoung Kim
Keyword(s):  
Strategic Behavior ◽  
Vantage Point ◽  
Motivating Factors ◽  
Debt Restructuring ◽  
Strategic Default ◽  
Asset Class ◽  
Financially Distressed ◽  
Basic Features ◽  
Private Loan ◽  
Basic Intuition

This chapter provides an introduction to distressed debt, primarily from the vantage point of debtholders in financially distressed corporations. In doing so, it gives a description of this sub-asset class and the basic intuition along with stylized examples to explain the motivating factors behind the strategic behavior of other stakeholders that may devalue a distressed-debt investor’s financial claim if left unattended. This chapter also discusses the considerations in distressed debt exchanges of public bond issuances or in the restructuring of private loan agreements, with the view to minimizing the likelihood of strategic default and other inefficient outcomes to investors of distressed debt. Overall, this chapter offers exposure to the basic features and terminology in distressed debt and debt restructuring.

Preventive Debt Restructuring and the Nigerian Draft Insolvency Legislation: Lessons from a Comparative Perspective

2020 ◽  
Vol 28 (1) ◽  
pp. 66-84
Author(s):  
Sanford U. Mba
Keyword(s):  
European Union ◽  
Economic Crisis ◽  
Final Analysis ◽  
The European Union ◽  
Debt Restructuring ◽  
The Us ◽  
Financially Distressed ◽  
Bankruptcy Code ◽  
Second Chance

Recently, the Nigerian Senate passed the Bankruptcy and Insolvency (Repeal and Re-enactment) Bill. This is no doubt a welcome development following the continued demand by insolvency practitioners, academics and other stakeholders for such legislation. The call has not only been for the enactment of just about any legislation, but (consistent with the economic challenges faced by businesses in the country), one that is favourably disposed to the successful restructuring of financially distressed businesses, allowing them to weather the storm of (impending) insolvency, emerge from it and continue to operate within the economy. This article seeks to situate this draft legislative instrument within the present wave of preventive restructuring ably espoused in the European Union Recommendation on New Approaches to Business Rescue and to Give Entrepreneurs a Second Chance (2014), which itself draws largely from Chapter 11 of the US Bankruptcy Code. The article draws a parallel between the economic crisis that gave rise to the preventive restructuring approach of the Recommendation and the present economic situation in Nigeria; it then examines the chances of such restructuring under the Nigerian draft bankruptcy and insolvency legislation. It argues in the final analysis that the draft legislation does not provide for a prophylactic recourse regime for financially distressed businesses. Consequently, a case is made for such an approach.

Debt Restructuring in the UK

2018 ◽  
Vol 15 (3) ◽  
pp. 449-471 ◽  
Author(s):  
Jennifer Payne
Keyword(s):  
Effective Mechanism ◽  
Debt Restructuring ◽  
The World ◽  
The Future ◽  
Fit For Purpose ◽  
English Law ◽  
Financially Distressed ◽  
The Government ◽  
The Uk

Many jurisdictions around the world are seeking to develop an effective mechanism for rescuing financially distressed but viable businesses. In the UK a number of different mechanisms exist which can be used to restructure distressed companies. The purpose of this paper is to assess the debt restructuring mechanisms currently available to companies in English law and to consider the proposed reform of the UK regime, announced by the Government in August 2018. It is argued that reform is needed, and that in general the proposals to introduce a restructuring moratorium and a restructuring plan which includes a cross class cramdown are to be welcomed. However, these reforms will need to be introduced with care in order to ensure that an appropriate balance is maintained between the interests of the company and the interests of the creditors and that, ultimately, the UK’s regime remains fit for purpose for the future.

Earnings Management Response to Debt Covenant Violations and Debt Restructuring

2002 ◽  
Vol 17 (4) ◽  
pp. 295-324 ◽  
Author(s):  
Bikki Jaggi ◽  
Picheng Lee
Keyword(s):  
Earnings Management ◽  
Financial Distress ◽  
Discretionary Accruals ◽  
Debt Restructuring ◽  
Distressed Firms ◽  
Debt Covenant ◽  
Financially Distressed ◽  
Covenant Violations

The study investigates whether the choice of income-increasing or income-decreasing discretionary accruals is related to the severity of financial distress and whether this choice is also influenced by the creditors' waivers of debt covenant violations. Financially distressed firms experiencing debt covenant violations and/or debt restructuring during the 1989–96 period are used to evaluate the management's choice of discretionary accruals. Discretionary accruals are calculated based on four different accrual models. The results show that managers of financial distressed firms use income-increasing discretionary accruals if they are able to obtain waivers for debt covenant violations, and use income-decreasing discretionary accruals if debt restructuring takes place or debts are renegotiated because waivers are denied. These findings thus provide support to the expectation that the choice of income-increasing or -decreasing discretionary accruals is influenced by the severity of financial distress. They also provide an explanation for divergence in the results of earlier studies on the use of income-increasing or -decreasing discretionary accruals by financially distressed firms.

The self and schizophrenia: a cognitive approach

2003 ◽  
Vol 62 (1) ◽  
pp. 45-51 ◽  
Author(s):  
Marek Nieznanski
Keyword(s):  
Normal Subjects ◽  
Control Group ◽  
Cognitive Approach ◽  
Schizophrenic Patients ◽  
Self Schema ◽  
Persons With Schizophrenia ◽  
Basic Features ◽  
Trait Words ◽  
Patients Experience ◽  
Normal Controls

The aim of the study was to explore the basic features of self-schema in persons with schizophrenia. Thirty two schizophrenic patients and 32 normal controls were asked to select personality trait words from a check-list that described themselves, themselves as they were five years ago, and what most people are like. Compared with the control group, participants from the experimental group chose significantly more adjectives that were common to descriptions of self and others, and significantly less that were common to self and past-self descriptions. These results suggest that schizophrenic patients experience their personality as changing over time much more than do healthy subjects. Moreover, their self-representation seems to be less differentiated from others-representation and less clearly defined than in normal subjects.

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