When a firm defaults on its debt, debt holders often receive less than 50% of the amount

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When a firm defaults on its debt, debt holders often receive less than 50% of the amount they are owed. Is the difference between the amount debt holders are owed and the amount they receive a cost of bankruptcy?

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Corporate Finance

ISBN: 978-0134083278

4th edition

Authors: Jonathan Berk, Peter DeMarzo

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Question Posted: Nov 24, 2016 08:12 AM

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When a firm defaults on its debt, debt holders often receive less than 50% of the amount

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