Credit derivatives allow creditors to transfer debt cash flow rights to other market participants while retaining … control rights. Theory predicts that this transfer can create empty creditors that do not fully internalize liquidation costs … and liquidate borrowers excessively often. This empty creditor problem is concentrated in firms whose creditors would face …

Credit default swaps (CDSs) can create empty creditors who potentially force borrowers into inefficient bankruptcy but … the effects of empty creditors on firm outcomes depend on the distribution of bargaining power among claimholders. Firms … are more likely to have empty creditors if these would face powerful shareholders in debt renegotiation. The empirical …

Firms with credit-default swaps (CDS) traded on their debt may face "empty creditors'' as hedged creditors have less … incentive to participate in firm restructuring. We test for the existence of empty creditors by employing an exogenous change to … drops when the effect of empty creditors is removed. This effect increases in the average CDS hedge position of a firm …