Government Involvement in Corporate Debt Restructuring : Case Studies from the Great Recession

Author/Editor:

David A. Grigorian ; Faezeh Raei

Publication Date:

November 1, 2010

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

The paper examines recent episodes of government involvement in corporate debt restructurings. It argues that corporate debt restructuring is an important step toward recovery from a financial crisis. We then discuss the rationale for, and modalities of, the state intervention in corporate debt workouts through reviewing six countries with large scale corporate debt workouts. Case studies reveal that the costs of corporate sector rescue are significant and in several cases on par with the costs of financial sector bailouts. The paper sheds light on the importance of contingent liabilities and associated risks to government balance sheet from the corporate debt side and emphasizes the need for improved contingency planning for corporations with potential systemic impact.

Series:

Working Paper No. 10/260

Subject:

Frequency:

Quarterly

English

Publication Date:

November 1, 2010

ISBN/ISSN:

9781455209606/1018-5941

Stock No:

WPIEA2010260

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

34

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