In a company bankruptcy, failure to follow the right approach results in a “fire sale” of assets: in a national financial crisis, it results in a flight of capital and an excessive fall in the exchange rate.
The third Working Party Report to the G22 on International Financial Crises addresses the problem where, in a crisis, all individual creditors look after their own private interests and, in so doing, create a situation which is worse for them as a whole (and for the debtor country). This is the problem known colloquially as “everyone rushing for the exit at once”.