Bankruptcy & Distressed Restructurings: Analytical Issues and Investment Opportunities

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Edward I. Altman
Beard Books, Dec 1, 1998 - Law - 417 pages
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In today's vulnerable and volatile business climate, corporate bankruptcy and Chapter 11 reorganization is a common occurrence at U.S. corporations of all sizes, in all sectors. As a result, the market for distressed firms' debt and equity securities has captured the interest and imagination of the investment community like never before. Bringing together some of the most prominent people in both the practitioner and academic communities, Bankruptcy & Distressed Restructurings includes the determinants of successful distressed exchange issues and Chapter 11 proceedings, bankruptcy and liquidation costs and their impact on corporate values, investment opportunities in distressed and defaulted securities, management and competitor behavior related to distress, and an evaluation of investor priorities and market efficiencies. With contributions from more than 30 experts, this insightful look at corporate distress is must reading for anyone involved with corporate finance, financial markets, economics, and law.
 

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Contents

CORPORATE CONTROL AND THE POLITICS OF FINANCE
3
FIRM VALUATION AND CORPORATE LEVERAGED RESTRUCTURINGS
45
TROUBLED DEBT RESTRUCTURINGS AN EMPIRICAL STUDY OF PRIVATE REORGANIZATION OF FIRMS IN DEFAULT
77
PRIVATE VERSUS PUBLIC CREDITOR EXPERIENCE IN DISTRESSED FIRM DEBT RESTRUCTURINGS
125
MANAGING A DISTRESSED FIRM
139
BANKRUPTCY COSTS AND VIOLATION OF CLAIMS PRIORITY
157
A MARKET ASSESSMENT OF BANKRUPTCY COSTS AND LIQUIDATION COSTS
191
INDUSTRY CONTAGION EFFECTS OF BANKRUPTCY AND FIRM SIZE
215
REGULATORY ISSUES IN SECONDARY TRADING OF DISTRESSED BANK LOANS
231
FINANCIAL DISTRESS REORGANIZATION AND ORGANIZATIONAL EFFICIENCY
245
BANKRUPTCY BOARDS BANKS AND BLOCKHOLDERS Evidence on Changes in Corporate Ownership and Control When Firms Default
275
MANAGEMENT TURNOVER AND FINANCIAL DISTRESS
313
EQUITY VALUATION AND THE RESOLUTION OF CLAIMS IN BANKRUPTCY
339
AN EMPIRICAL INVESTIGATION OF US FIRMS IN REORGANIZATION
361
ARE STOCKHOLDERS BETTER OFF WHEN DEBT IS RESTRUCTURED PRIVATELY?
391
EMERGING TRENDS IN BANKRUPTCY REORGANIZATION Edward I Altman
401

HLT BANK LOANS A NEW MARKET FOR RELATIVE VALUE INVESTORS
223

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Page 13 - January 29. 1989 management, often is intimately involved in the strategic direction of the company, and on occasion even manages. That description fits Carl Icahn, Irwin Jacobs and Kohlberg, Kravis, Roberts (KKR) well. Before the mid- 1930s, investment banks and commercial banks played a much more important role on boards of directors, monitoring management, and occasionally engineering changes in management. At the peak of their activities, JP Morgan and several of his partners served on the board...
Page 14 - Pujo hearings in 1913. Current attacks on Wall Street are reminiscent of that era. The result of these political and other forces over the past 50 years has been to leave managers increasingly u union itored.
Page 13 - I mean an investor who actually monitors management, sits on boards, is sometimes involved in dismissing management, is often intimately involved in the strategic direction of the company, and on occasion even manages.
Page 17 - ... appears to be large relative to that of the LBOs. The effective ownership interest in the gains realized by the buyout pool generally runs about 20% for the general partners as a group. LBO business unit heads also have far less bureaucracy to deal with, and far more decision rights in the running of their businesses. In effect, the LBO association substitutes incentives provided by compensation and ownership plans for the direct monitoring and often centralized decision making in the typical...

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About the author (1998)

John B. Caouette is the former vice chairman of MBIA Insurance Corporation and is currently Chairman of Channel Capital Group, a European-based credit derivative products company.

Edward I. Altman, PhD, MBA, is the Max L. Heine Professor of Finance at the Stern School of Business, New York University. Previously, he chaired the Stern School's MBA Program for twelve years. He has been acclaimed as the world's leading academic on credit risk and distressed and high-yield debt for most of his forty-year career.

Paul Narayanan is Director of Credit Portfolio Analytics at American International Group, Inc. He has been involved with credit risk management for more than two decades and in the development and deployment of analytical solutions for credit issues.

Robert W. J. Nimmo is the former group risk director of Barclays PLC, where he was responsible for all the risk management activities of the group covering credit, market, operational risk, and compliance. He was also the chief risk officer for Wachovia Corporation (2000-2001) and for Westpac Banking Corporation (1993-2000).

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