This White Paper considers the problem of corporate debt overhang and discusses the policy tools to address it. Corporate debt overhang describes the scenario in which a company's debts are so great that they deter new lenders, affect corporate decision-making, and stifle new investment. At scale, this phenomenon can compromise economic recovery. A greater level of debt can be tolerated in a booming economy, where returns on investment are high, but in a stagnant or contracting economy, where returns on investment are low, the risks associated with corporate debt overhang tend to be more severe. The White Paper is timely and unique in its breadth and perspective. It presents the different elements of the possible solution sets to the corporate debt overhang problem, drawing on the World Bank Group's unique field experience in designing and delivering these solutions. The findings in this paper can be used to help policy makers understand the tools available to them and, more importantly, which tools are most likely to deliver the highest marginal benefit for their country
