# kaal:claim:2061166-031

**Claim.** A trigger that fires too early wastes the equity injection: conversion occurs without a real need for capital or additional voting shareholders, and the effect of the injection may have dissipated by the time it is actually needed.

**Type.** failure  **Support.** argued

**Holds when.**

- contingent capital converting on a trigger set too far from distress

**Source quote.**

> If conversion is triggered too early without a real need for an equity capital injection (and additional voting shareholders), the impact of the equity capital injection may have dissipated and may no longer be available when actually needed.

**From.** Christoph K. Henkel, Wulf A. Kaal, *Contingent Capital in European Union Bank Restructuring* (2012), B. Timing Trigger Events, page 66

**Cite as.** Christoph K. Henkel, Wulf A. Kaal, Contingent Capital in European Union Bank Restructuring (2012). SSRN: https://ssrn.com/abstract=2061166

**Verify.** sha256 of source PDF `43625ea260d0fc045e86d3435df50c9d0ca4abf8542e6085a6165be6653b4a7b` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Henkel%20and%20Kaal%20-%202012%20-%20Contingent%20Capital%20in%20European%20Union%20Bank%20Restructuring.pdf

**Failure mode.** Premature conversion dissipates the capital injection  (family: trigger-design-failure)

**Topics.** contingent-capital

**Keywords.** trigger-timing, conversion, contingent-capital, recapitalization, design-failure

**Related claims.**

- restates: https://wulfkaal.github.io/claims/1908473-003
- restates: https://wulfkaal.github.io/claims/1998455-012

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