This paper develops a new model of debt renegotiation in a structural framework, that accounts for both taxes and … coupon reduction to creditors, given that the new coupon is chosen such that debt value remains constant. Our result shows … firm without hurting the creditors. This model of debt renegotiation can be viewed as a way of passing from a junk bond to …

price them into the ex-ante credit spreads. Using a realistic dynamic bargaining model of reorganization, we show that the … off-equilibrium threat of costly renegotiation can lead to lower leverage, even with liquidation in equilibrium. If …

enhance its bargaining power during negotiations with non-financial stakeholders. I show that reimbursement rates negotiated … between a hospital and insurers for a specific procedure are higher when the hospital has more debt. I show that this effect … provide direct evidence that debt improves a firm's bargaining outcomes …

setting, we examine the implications of incomplete contracting theory for debt contract design. Consistent with incomplete … contracting theory, we find that, as renegotiation costs fall, the maturity of debt contracts lengthens, the likelihood of …