Examines the steps involved in restructuring the corporate sector. Large-scale corporate restructuring made necessary by a financial crisis is one of the most daunting challenges faced by economic policymakers. The government is forced to take a leading role, even if indirectly, because of the need to prioritize policy goals, address market failures, reform the legal and tax systems, and deal with the resistance of powerful interest groups.

In light of the periodic financial crises of the late 1990s, there has been a growing recognition of the need for a strategy to avoid and mitigate the severity of crises in the corporate sector, requiring the complementary efforts of policymakers, regulators, lawyers, insolvency experts and financiers. This publication examines the issue of corporate restructuring, drawing on case studies of corporate crises in Indonesia, Korea, Malaysia and Thailand among others; and discusses a range of topics including the key role of governments in securing an enabling legal system, effective out-of-court workouts, supportive tax regimes, policy and regulatory initiatives to address systemic corporate problems.

Examines the steps involved in restructuring the corporate sector. Large-scale corporate restructuring made necessary by a financial crisis is one of the most daunting challenges faced by economic policymakers. The government is forced to take a leading role, even if indirectly, because of the need to prioritize policy goals, address market failures, reform the legal and tax systems, and deal with the resistance of powerful interest groups.

This paper summarizes the objectives, tasks, and modalities of large-scale, post-crisis corporate restructuring based on nine recent episodes with a view to organizing the policy choices and drawing some general conclusions. These episodes suggest that government-led restructuring efforts should integrate corporate and bank restructuring in a holistic and transparent strategy based on clearly defined objective and including sunset provisions.

This paper describes issues in Korea’s corporate sector, the need for restructuring, and the authorities’ initiatives and challenges. It then identifies lessons from other countries’ experience and conducts an econometric analysis based on cross-country aggregate data, compared with previous studies which mostly use firm-level data. This analysis finds that restructuring episodes, while sometimes challenging in the short term, have typically been associated with more rapid economic growth afterward. Corporate restructuring could have a negative effect on the labor and the financial markets in the short term, but is associated with positive growth through increased investment and capital productivity in the medium term, outpacing the negative effects.

While acquisitions and expansion strategies are understood as exciting in the business world, contraction activities are received less enthusiastically. Nevertheless, portfolio restructuring constitutes a strategic tool to increase the strategic focus of firms and achieve economies of scale and an efficient control of multiple business units. This restructuring thus has distinct implications for companies and units. The Handbook of Research on Corporate Restructuring and Globalization provides emerging research on the theoretical infrastructure for portfolio restructuring in a single piece of work and explores important topics in the field including the implications on foreign and domestic units and the degree to which increasing globalization influences restructuring practices. Featuring coverage on a broad range of topics such as emerging markets, risk assessment, and global business, this book is ideally designed for corporate managers, government officials, scholars, researchers, and students.

The paper examines recent episodes of government involvement in corporate debt restructurings. It argues that corporate debt restructuring is an important step toward recovery from a financial crisis. We then discuss the rationale for, and modalities of, the state intervention in corporate debt workouts through reviewing six countries with large scale corporate debt workouts. Case studies reveal that the costs of corporate sector rescue are significant and in several cases on par with the costs of financial sector bailouts. The paper sheds light on the importance of contingent liabilities and associated risks to government balance sheet from the corporate debt side and emphasizes the need for improved contingency planning for corporations with potential systemic impact.