This paper develops a model to assess the potential for unfairness in freeze-out bond covenant exchange offers by highlighting the role played by coordination among bondholders. We show that (i) shareholders have an incentive to always structure an exchange offer unfairly and (ii) the...

A covenant is a particular clause in a firm's debt contract that restricts the firm'soptions and provides creditors with the right to enforce certain actions (e.g., earlyrepayment) if the covenant is violated. According to the agency theory of covenants,if the benefits of implementing a covenant...

This paper develops a model to assess the potential for unfairness in freeze-out bond covenant exchange offers by highlighting the role played by coordination among bondholders. We show that (i) shareholders have an incentive to always structure an exchange offer unfairly and (ii) the...