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 …

particular, the interplay between government debt and private leverage is attracting increasing attention in the current context …The policy focus on excessive leverage in the euro area has raised interest in developing comprehensive analytical … approaches to better understand the interrelationship between leverage and deleveraging processes across economic agents. In …

This paper develops a model with the novel feature that firms can renegotiate debt both in and outside distress. We … show that this feature is crucial for debt renegotiation models to explain corporate policies and debt prices. Specifically … debt control premiums, and predicts realistic renegotiation timing policies. Incorporating both renegotiation events also …

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 …