Keywords
Covid-19 distress, court congestion, excess liquidation
Abstract
In the wake of the COVID-19 pandemic, the financial and legal system will need to deal with a surge of financial distress in the business sector. Some firms will be able to survive, while others will face bankruptcy and thus need to be liquidated or reorganized. Many surviving firms will need to be downsized or acquired. In normal times, this triage is supported by the court system, banks, and financial markets. The goal of this paper is to size up the coming surge of financial distress, list the challenges it presents in the current environment, and analyze potential policy solutions. Overall, our analysis suggests that the two key issues will be court congestion and excess liquidation and failure of small firms.
Original Publication Citation
“Sizing Up Corporate Restructuring in the COVID Crisis,” with Robin Greenwood and David Thesmar, Brookings Papers on Economic Activity, Fall 2020 (Special Edition): 391-428.
BYU ScholarsArchive Citation
Greenwood, Robin; Iverson, Benjamin; and Thesmar, David, "Sizing Up Corporate Restructuring in the Covid Crisis" (2020). Faculty Publications. 8969.
https://scholarsarchive.byu.edu/facpub/8969
Document Type
Peer-Reviewed Article
Publication Date
2020
Publisher
Brookings Papers on Economic Activity
Language
English
College
Marriott School of Business
Department
Finance
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