Government Involvement in Corporate Debt Restructuring: Case Studies from the Great Recession
IMF Working Papers, November 1, 2010
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Bibliographic details
- Authors: David A. Grigorian, Faezeh Raei
- Published: November 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781455209606.001
Summary and scope
- Examines recent episodes of government involvement in corporate debt restructurings.
- Argues that corporate debt restructuring is an important step toward recovery from a financial crisis.
- Discusses the rationale for, and modalities of, state intervention in corporate debt workouts through reviewing six countries with large scale corporate debt workouts.
- Highlights that contingent liabilities and associated risks to government balance sheet from the corporate debt side are important and require improved contingency planning for corporations with potential systemic impact.
Key findings from case studies
- Case studies reveal that the costs of corporate sector rescue are significant.
- In several cases, the costs of corporate sector rescue are on par with the costs of financial sector bailouts.
- Emphasizes the fiscal significance of contingent liabilities arising from corporate debt interventions.
Policy implications and recommendations
- Corporate debt restructuring is a necessary component of recovery policies after financial crises.
- State intervention in corporate debt workouts should be guided by clear rationale and well-defined modalities.
- Governments need improved contingency planning for corporations with potential systemic impact to manage contingent liabilities and balance-sheet risks.
Publication and metadata
- Authors: David A. Grigorian, Faezeh Raei
- Date: November 1, 2010
- Series: Working Paper No. 2010/260
- Issue: 260
- Volume: 2010
- Pages: 34
- DOI: https://doi.org/10.5089/9781455209606.001
- Stock No: WPIEA2010260
- ISBN: 9781455209606
- ISSN: 1018-5941
- Subjects: Banking, Commercial banks, Debt restructuring, Financial crises, Loans
- Keywords: balance sheet, banking sector, financial support, foreign currency, WP
Source: David A. Grigorian and Faezeh Raei, "Government Involvement in Corporate Debt Restructuring: Case Studies from the Great Recession", IMF Working Papers 2010, 260 (2010), November 1, 2010.