Title

Debt Restructurings, Holdouts, and Exit Consents

Department

Economics, Finance, & Quantitative Analysis

Document Type

Article

Publication Date

4-2007

Abstract

This paper investigates the use of exit consents in a sample of bond exchange offers during 1986-1997. We find that exit consents are common, approximately 56% of the exchange offers in our sample have them and 60% of the exit consents are by non-financially distressed firms. Using a probit model, we find that a set of variables that proxy for holdout problems is able to significantly explain the use of exit consents. Reducing holdouts is necessary for timely and efficient debt restructurings and achieving financial stability particularly in sovereign debt markets.