Corporate Restructuring Lessons from Experience,9780821359280

Corporate Restructuring Lessons from Experience

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ISBN13: 9780821359280
ISBN10: 0821359282
Format: Paperback
Pub. Date: 2005-04-10
Publisher(s): World Bank Publications
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Summary

In the wake of the periodic financial crises of the late 1990s, the international financial institutions and many experts have recognized the need for a strategy to avoid and mitigate the severity of crises in the corporate sector. Addressing this problem requires the complementary efforts of policymakers, regulators, lawyers, insolvency experts, corporate restructuring specialists, and financiers.What are the roots of corporate distress? Can systemic corporate crises be predicted? What is the role of legal frameworks in preventing and coping with a crisis? What are the most effective financial techniques for dealing with distressed corporates? This timely volume takes a multidisciplinary perspective on corporate restructuring, and examines international experiences in dealing with corporate crises.

Table of Contents

Preface xix
Acknowledgments xxi
Contributors xxiii
Introduction: Toward Better Practices in Systemic Corporate Restructuring xxxi
Michael Pomerleano
The Government's Role xxxii
Monitoring xxxii
Intervention xxxiv
Legal Framework for Corporate Restructuring xxxvii
Tax Issues xxxix
Skills and Capacity xl
Financial Engineering: Financial and Operational Restructuring xliii
Asset Management Companies xliii
Alternatives to Asset Management Companies xliv
Use of Financial Techniques xlv
References xlviii
Notes xlix
Synopsis of Conference Papers
1(10)
William Shaw
Overviews of the Crisis and General Principles
2(3)
War Stories from the Crises
5(1)
Technical Issues
6(1)
Note
7(4)
Part I: Overviews of the Crisis Experience
Policy Approaches to Corporate Restructuring around the World: What Worked, What Failed?
11(48)
Stijn Claessens
Overview of Approaches
11(30)
Government-Sponsored Voluntary Workout Schemes
14(5)
Court-Supervised Restructuring and Bankruptcy
19(5)
Restructuring by Public Asset Management Companies and State-Owned Banks
24(8)
Voluntary Workouts outside Government-Sponsored and In-Court Frameworks
32(3)
Supporting Policy Changes
35(6)
Outcomes in Corporate Restructuring
41(9)
Nonperforming Loans and Financial Indicators
41(7)
Operational Restructuring Measures
48(2)
Policy Lessons
50(6)
An Efficient Insolvency System
51(1)
Adequate Loss-Absorption Capacity
52(1)
A Proper Framework of Incentives
52(1)
A Limited Role for Banks and the State
53(1)
A Menu of Approaches
54(1)
Corporate Governance and Other Reforms
55(1)
References
56(1)
Notes
57(2)
Recent International Experiences in the Use of Voluntary Workouts under Distressed Conditions
59(40)
Ira Lieberman
Mario Gobbo
William P. Mako
Ruth L. Neyens
The London Approach
61(4)
Corporate Restructuring in Korea
65(11)
Initial Government Response
66(1)
Policy Measures
67(2)
Workout Program
69(5)
Daewoo: ``Too Big to Fail?''
74(1)
Special-Purpose Vehicles, Restructuring Funds, and M&A Transactions
75(1)
Strengthening the Corporate Restructuring Process within the Banks
76(1)
Corporate Restructuring in Turkey: The Istanbul Approach
76(8)
Legal Framework and Structure
77(2)
Implementation of the Istanbul Approach
79(2)
Impediments
81(3)
Corporate Restructuring in Mexico
84(2)
Poland: Decentralized Workouts Pursuant to Privatization of State-Owned Banks
86(4)
Lessons Learned
90(3)
References
93(2)
Notes
95(4)
Emerging-Market and Crisis Applications for Out-of-Court Workouts: Lessons from East Asia, 1998--2001
99(28)
William P. Mako
Corporate-Financial Sector Linkages
101(3)
Recent Approaches to Out-of-Court Workouts
104(3)
Korea
104(1)
Malaysia
104(1)
Thailand
105(1)
Indonesia
106(1)
Results
107(3)
Easy Lessons
110(4)
Principles and Processes
110(1)
Legal and Regulatory Impediments
111(2)
Capacity Constraints
113(1)
Potential Deal Breakers
114(5)
Debtor Losses
114(1)
Creditor Losses
115(2)
Inter-Creditor Differences
117(2)
References
119(1)
Notes
120(7)
Are More Restructuring Regimes Becoming Like the U.S. Chapter 11 System?
127(14)
James H. Zukin
Alan Fragen
Dorian Lowell
Chapter 11
128(2)
Restructuring Regimes in Industrial Countries
130(1)
Requirements of a Rapid-Sequencing Process in Developing Countries
131(2)
The Merits of a Chapter 11 System for Countries
133(2)
Conclusions
135(1)
Appendix 5.1: Questions and Answers on the Current Sovereign Restructuring Process
136(3)
Reference
139(1)
Notes
139(2)
The Successful Asset Management Companies
141(30)
Ruth L. Neyens
Dato Zukri Samat
Beom Choi
Yang Kaisheng
Shinjiro Takagi
The Role and Progress of Danaharta, Malaysia, Dato Zukri Samat
142(2)
Korea Asset Management Corporation: The Host of Restructuring Vehicles Tried in Korea, Beom Choi
144(4)
China's Huarong Asset Management Company, Yang Kaisheng
148(3)
China's Banking Reform
148(1)
Asset Management Companies
149(2)
Restructuring Approaches Used in Japan, Shinjiro Takagi
151(10)
Improvements in the Legal Structure for Corporate Reorganizations
152(2)
The Industrial Revitalization Corporation of Japan
154(6)
Human Resources for Corporate Restructuring
160(1)
Conclusions
161(2)
Appendix 6.1: Civil Rehabilitation Proceeding in Japan
163(1)
Appendix 6.2: Corporate Reorganization Proceeding in Japan
164(2)
Appendix 6.3: Out-of-Court Workout in Japan
166(2)
Notes
168(3)
Progress toward the Resolution of Nonperforming Loans
171(14)
Jack Rodman
The Resolution of Nonperforming Loans
172(8)
Recommendations
180(1)
References
181(1)
Note
181(4)
Part II: War Stories from the Crises
Restructuring in Weak Legal and Regulatory Jurisdictions: The Case of Indonesian Restructurings
185(20)
Ray Davis
Successful Indonesian Restructurings
187(1)
The Impediment of a Weak Court System
188(1)
Effect of Weak Courts on the Rights of Secured Creditors
189(1)
Strong Creditor Organization and Leadership
190(4)
Cash Controls
194(1)
Unexpected Effect of Laws Passed at the Time of the Crisis
195(1)
Role of Government Interventions in Restructuring Negotiations
196(1)
Foreign Government Intervention
196(3)
Preserving the Value of the Enterprise
199(1)
Complexity of Public Debt
199(2)
Summary
201(1)
Notes
201(4)
Government Policy Responses in Korea
205(4)
Hogen Oh
Note
208(1)
Malaysia's Experience withCorporate Restructuring
209(14)
Dato Zainal
Abidin Putih
Before the Crisis
209(1)
Impact of the Crisis
210(1)
Factors Contributing to the Crisis
211(2)
The National Economic Recovery Plan
213(1)
Banking Restructuring
214(4)
Danaharta
215(2)
Danamodal
217(1)
Corporate Debt Restructuring Committee
218(1)
Corporate Restructuring
218(1)
Conclusions
219(1)
References
220(1)
Notes
221(2)
An Alternative to Government Management Companies: The Mellon Approach
223(6)
Richard H. Daniel
Corporate Restructuring Funds: The Lessons from Korea
229(8)
Christopher Vale
Background
229(1)
Corporate Restructuring Funds
230(2)
The Investment Process
232(1)
Positives and Negatives
233(4)
Part III: Technical Issues
Debt and Firm Vulnerability
237(24)
Jack Glen
Data Description
242(7)
Regression Analysis
249(7)
Constituent Components: Sales Margins and Turnover Effects
253(1)
Country Effects
254(2)
Conclusions
256(1)
References
257(1)
Notes
258(3)
The Contingent Claims Approach to Corporate Vulnerability Analysis: Estimating Default Risk and Economywide Risk Transfer
261(40)
Michael T. Gapen
Dale F. Gray
Cheng Hoon Lim
Yingbin Xiao
Contingent Claims Analysis
263(6)
The Contingent Claims Methodology
264(2)
Distance to Distress and Probability of Default
266(1)
Moody's MfRisk Model: Contingent Claims Analysis in a Multisector Framework
267(2)
Assessing Corporate Sector Vulnerabilities
269(15)
The Brazilian Corporate Sector
269(3)
The Contingent Claims Approach and Financial Market Uncertainty in Brazil in 2002
272(6)
The Thai Corporate Sector
278(3)
The Contingent Claims Approach and the Asian Financial Crisis
281(3)
Multisector Contingent Claims Analysis
284(6)
Multisector Contingent Claims Analysis: Brazil
285(2)
Multisector Contingent Claims Approach: Thailand
287(3)
Conclusions
290(5)
Advantages of the Contingent Claims Approach
291(2)
Hurdles to Overcome
293(1)
Implications for Macroeconomic Risk Management
294(1)
References
295(2)
Notes
297(4)
Developing an Effective Framework for Insolvency and Credit Rights
301(30)
Gordon W. Johnson
The Role and Significance of Enforcement and Insolvency Systems
302(1)
Meeting the Challenges of Business in a Global Market
302(1)
Promoting Sound Investment Climates and Commercial Confidence
303(1)
The Risk Assessment Continuum
303(2)
The World Bank Principles and the Risk Assessment Continuum
305(3)
The Commercial Insolvency Framework
306(2)
Are the World Bank Principles Pro-Creditor or Pro-Debtor?
308(1)
Experience with the World Bank Principles under the ROSC Framework
308(3)
Creditor Rights Systems
309(1)
Insolvency Systems
309(1)
Rehabilitation and Reorganization of Businesses
309(1)
Institutional and Regulatory Frameworks
310(1)
Lessons and Experience in Applying the Principles
311(1)
Corporate Restructuring: Common Implementation Goals
312(4)
Corporate Rescue Approaches
312(1)
Formal Proceedings
313(1)
Comparative Tax Consequences for Debt Write-offs
314(1)
Social Protection Systems
315(1)
The Way Forward
316(1)
Appendix 15.1: World Bank Principles and Guidelines for Effective Insolvency and Creditor Rights Systems
317(12)
References
329(1)
Notes
329(2)
Appendix 1 Financial Restructuring: Techniques and Negotiating Dynamics
331(48)
Alan D. Fragen
Debt-for-Debt Exchange
334(16)
Situational Overview
334(6)
Situational Assessment
340(4)
The Negotiating Dynamics
344(6)
Debt-for-Equity Exchange
350(29)
The Negotiating Dynamics
368(11)
References
379(1)
Notes
379

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