Doh, Hyun Soo; Feng, Guanhao - In: Journal of derivatives and quantitative studies 32 (2024) 3, pp. 182-199
strategically utilize the renegotiation option as a bankruptcy threat, pushing down the debt value below the potential liquidation … renegotiation option. In the model, creditors decide when to withdraw their funding and equityholders can renegotiate the contract … value of the firm. In such a scenario, a deterred default resulting from emergency capital injections could be detrimental …