Josefine Boehm

• The underlying literature review examines the relation between a financially distressed firm’s capital structure and its decision for in- or out-of-court reorganization. Academic studies covering the US and Germany are considered and the two countries’ bankruptcy regimes are discussed given their legal proceedings’ influence on the bargaining dynamics in- as well as out-of-court. Particular focus is placed upon the discussion of bank lenders’ versus bondholders’ role in the reorganization of a distressed firm as well as upon alternative forms of funding such as via activist iestors or debtor-in-possession financing. Although the topic at hand is widely covered especially for the US and of great interest particularly since the financial crisis, areas for future research are identified relating to the still ambiguous role of bank financing, to the evolving bargaining dynamics given activist iestors’ increasing iolvement and to the role of bank pools as well as public debt restructurings in Germany.