In 2008 and 2009, bondholders of ailing companies were affected by the reemergence of an important corporate restructuring strategy known as distressed exchange. Fourteen companies completed this desperate attempt to avoid a formal bankruptcy filing in 2008: about twice as many as in any single year in the last 25 years, and involving twice the total amount of money involved in the entire previous history of distressed exchanges (1984-2007). And, in just the first four months of 2009, nine firms have already completed a distressed exchange. The recovery rate of bondholders participating in distressed exchanges over the last 25 years is significantly higher than recoveries on more dramatic types of default, namely payment defaults and bankruptcies. However, there is no guarantee that a distressed exchange will permanently immunize the firm from further distress, with almost half of all companies completing distressed exchanges prior to 2008 ultimately filing for bankruptcy.