Corporate Debt Restructuring-A Proposal for East Asia : Auctions Speak Louder than Words
Auctions may be an appropriate way to reorganize the liabilities of some overindebted East Asian firms - those that are generally well run, for which there is merit in keeping the existing owners in place, but for which conventional bankruptcy proc...
| Main Authors: | , |
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| Format: | Viewpoint |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/1999/11/439478/corporate-debt-restructuring-proposal-east-asia-auctions-speak-louder-words http://hdl.handle.net/10986/11451 |
| Summary: | Auctions may be an appropriate way to
reorganize the liabilities of some overindebted East Asian
firms - those that are generally well run, for which there
is merit in keeping the existing owners in place, but for
which conventional bankruptcy procedures are proving too
slow. This Note proposes an auction scheme dubbed Accord -
for Auction-based Creditor Ordering by Reducing Debts. Firms
pay creditors in sequence as their operating cash flows
permit rather than on a promised schedule. Creditors bid for
position in the queue by the proportion of debt they
forgive, choosing between smaller or more deferred
repayments. The outcome: a firm with serviceable debt,
controlled by existing owners with an incentive to operate
it efficiently. |
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