In many countries, bankruptcy is associated with low recovery by creditors. We develop a model of corporate credit … markets in such an environment. Corporate credit is provided by either a bond market or risk-averse banks. Restructuring of …

We analyze credit line characteristics and changes in cash for a panel of firms over 1996-2006, and find evidence … shareholder value. We find that shareholders of financially-unconstrained firms value credit line availability and cash holdings … similarly. Financially-constrained firms can increase firm value by increasing cash and credit line debt by the same amount …

) in 2011. We find that US firms experience a reduction in credit lines but not in term loans from EU banks. In addition …, US firms are able to compensate for the reduction in credit lines from EU banks by securing liquidity facilities from US …

gains and losses on the liabilities attributable to changes in the banks' own credit risk, referred to as the debt valuation …

debt renegotiations. We show that this feature is crucial to explain the cross-section of observed credit spreads and the …