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Distressed debt in Germany: What's next? Possible innovative exit strategies

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  • Dickler, Robert A.
  • Schalast, Christoph

Abstract

During the past two years, private equity funds have acquired substantial portfolios of nonperforming loans from banks in Germany. Typically a private equity investor does not commit funds unless exit strategies are clearly defined. The usual exit strategies for distressed debt investors are fix it (restructuring and turnaround), sell it (sale of debt or equity), or shut it down (liquidation). A new alternative exit strategy for NPL investors considered here is the transfer of credit recovery risk.

Suggested Citation

  • Dickler, Robert A. & Schalast, Christoph, 2006. "Distressed debt in Germany: What's next? Possible innovative exit strategies," Frankfurt School - Working Paper Series 73, Frankfurt School of Finance and Management.
    • Handle: RePEc:zbw:fsfmwp:73
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Focus; diversification; specialization; monitoring; bank returns; bank risk; Non Performing Loans; Distressed debt investing; Synthetic securitization; Collateralized debt obligations; Credit risk transfer; Credit derivatives; Credit default swaps; Credit recovery swaps; Credit portfolio management; Credit portfolio risk; Credit portfolio returns; Efficiency of credit risk portfolio allocations; Learning effects;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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