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 … the bankruptcy code in Germany that effectively removes their potential impact on CDS firms. Using a unique dataset on …

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 … the bankruptcy code in Germany, that effectively removes their potential impact on CDS firms. Using a unique dataset on …

Credit derivatives give creditors the possibility to transfer debt cash flow rights to other market participants while … such debt unbundling crucially hinge on shareholder bargaining power. We find that creditors buy more CDS protection when …

Credit derivatives give creditors the possibility to transfer debt cash flow rights to other market participants while … such debt unbundling crucially hinge on shareholder bargaining power. We find that creditors buy more CDS protection when …

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 …