This post was taken from Distressed Debt Investing. The Anatomy of a Double-Dip Mark P. Kronfeld (1) American Bankruptcy Institute Bankruptcy lawyers and distressed investors often loosely use the term “double-dip” to describe scenarios where a creditor can increase its recovery by multiplying its allowed claim against a particular entity or asserting claims against multiple […]
Distressed Debt Investing Website: The Postpetition Interest Debate: What Distressed Debt Investors Need to Know Bankruptcy Courts have long taken divergent approaches to the appropriate calculation of postpetition interest on general unsecured claims in solvent debtor cases. While some courts have applied the federal judgment rate of interest pursuant to 28 U.S.C. § 1961(a), […]
Distressed Investing Website: Contesting Priming Liens in DIP Financing Within any chapter 11 business bankruptcy, a secured creditor runs the risk of having its interest primed in favor of a lender who provides the debtor additional operating capital during the pendency of the bankruptcy proceedings through debtor-in-possession (“DIP”) financing under § 364 of the Bankruptcy […]
Distressed Debt Investing Capital structure arbitrage is a strategy used by many directional, quantitative, and market neutral credit hedge funds. In essence, it is going long one security in a company’s capital structure while at the same time going short another security in that same company’s capital structure. For instance, “long sub bonds, short senior […]
From xtract research 9/20/11 There are two types of fraudulent transfers under the Delaware Fraudulent Transfer Act. The first, actual fraud, requires actual intent to hinder, delay or defraud any creditor. Actual intent is very difficult to prove, and we don’t believe, it can be successfully argued here. The second, constructive fraud, requires the holders […]
Distressed Debt Investing Website 2/10/11 Philadelphia Newspapers In 2006, Philadelphia Newspapers, LLC (debtor), acquired the Philadelphia Inquirer, Philadelphia Daily News, and philly.com for $515 million with a $295 million loan secured by a first priority lien on substantially all of the debtors’ assets. In February 2009, the debtors filed for Chapter 11 after defaulting on […]
Distressed Debt Investing Website 01/04/11 Adequate Protection is always as an interesting issue when it comes to investing in distressed bonds and bank debt secured by various assets. Because a creditor’s interest is secured by those same assets, it is assumed that the debtor will set up a mechanism to preserve the value of […]
Distressed Debt Investing Website 12/20/10 As noted many times on this site, Chapter 11 cases are expensive. From paying $700-$1200/hour for senior lawyers, success based fees for financial advisors, and (in my opinion the most important) business issues such as loss of customers, suppliers, employees, etc costs start to add up. That being said, and […]
Distressed Debt Investing Trade Claims Primer Introduction While bank lenders and bondholders generally represent the largest portion of debtor’s pre- petition claims, upon filing there is a large constituency of other creditors who also possess claims against the debtor at various levels of priority within the capital structure. Because the sale, assignment and transfer of […]
Distressed Debt Investing Website 09/08/10 Analyses of distressed investments often range from the relatively straightforward to the mind numbingly complex. For investments in companies with a simple capital structure, investors will focus on factors such as cash flows, collateral value and terms of the governing credit document. In larger, more complex companies, investors might have […]