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Key success factors in the revitalization of distressed firms : A case of the Korean corporate workouts

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Frame of Image  The key results are summarized as follows. First, the initial conditions on the debt structure of the workout companies are significantly related to the revitalization from both creditors’ and debtors’ point of view. Second, the debt restructuring instruments are insignificant in the success of corporate turnarounds, but the debt-to-equity conversion has been a relatively effective tool. Third, the selfrestructuring efforts, employment downsizing and governance reshuffling do not affect the performances significantly.
Key Words: Corporate Distress, Corporate Workouts, Reorganization JEL Classification: G34, G38, C35
1. Introduction
The massive corporate sector distresses around the 1997 financial crisis in Korea, combined with the danger of financial markets collapse due to subsequent capital inadequacy of most commercial banks, called attention to the wide uses of corporate finance tools under bankruptcy. In that the financial crisis is an event that periled not only the viability of the individual firms but also that of the entire financial system, most corporate distresses cannot ravel out solely with formal resolution methods, or bankruptcy filings to the court. In addition to the weak capacity and deficient expertise of the court, a host of distressed companies and sizable amounts of the delinquent debts that could further exacerbate the already crisis-hit economy render the formal bankruptcy procedures insufficient as well as inefficient. Indeed, according to Worldbank


Full Text
Title Key success factors in the revitalization of distressed firms
Similar Titles
Sub Title

A case of the Korean corporate workouts

Material Type Reports
Author(English)

Kang, Dongsoo

Publisher

Seoul:KDI school of Public Policy and Management

Date 2004-02
Series Title; No Working papers
Pages 35
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Industry and Technology < Entrepreneurship
Holding KDI School of Public Policy and Management