Stephen Moyer Distressed Debt Pdf Merge

The seminar was geared towards—and mostly attended by—investors fairly new to distressed investing. From conversations with other attendees it seemed the majority were “equity guys” who wanted to get involved with distressed investing. For the handful of experienced distressed investors the seminar served more as a review. And while the “distressed guys” may not have been exposed to any new concepts, it was both very interesting and highly impressive to hear Steve discuss numerous bankruptcy cases. From his examples it seemed like he was involved in every meaningful case for the last two decades, which probably isn’t that far from the truth. First, the topic of supply and demand for distressed assets in the coming years was discussed. As previously discussed on this blog, most of the distressed community expects default rates to remain elevated for the next several years.

However, unlike many past high-default periods, there has been an unprecedented amount of capital raised by distressed investing vehicles (hedge funds, asset managers, private equity) prior to the peak in defaults. Moyer believes the total amount of “new capital” raised for distressed investing to be in the $60-80 billion range. That said, he believes this level of distressed demand will be commiserate with the amount of future distressed opportunities and shouldn’t cause undue pressure on returns. The second interesting topic was Steve’s discussion of the GM/Chrysler bankruptcies and their potential role as precedents for future bankruptcies. On this topic he was relatively “bearish” in that he thinks there is a good chance that future bankruptcy cases will cite the GM/Chrysler decisions as precedents for screwing different classes of claims. His advice, predictably, was to more carefully analyze and/or avoid situations where the government may be involved. Pressed further though, he also seemed a bit concerned that there could be problems with cases not involving the government.

Distressed securities are securities over companies or government entities that are experiencing financial or operational distress, default, or are under bankruptcy. As far as debt securities, this is called distressed debt. Purchasing or holding such distressed-debt creates significant risk due to the possibility that bankruptcy. You first get into distressed debt investing? Marc Lasry (ML): Well, when I was in law school. I actually didn't. Distressed and special situations investing. Prior to joining BulwarkBay, Julia held research positions. Marks, his investment memos are great too), and. Distressed Debt Analysis (Steve Moyer).

Now, as a disclaimer, it’s important to note that PIMCO was one of, if not the largest GM bondholder and his comments are probably colored as such. His opinion on this matter stands in stark contrast to those expressed by several participants at the Global Distressed Investing Forum, where the consensus was that GM/Chrysler as case law would be a non-event. Anecdotally, Mr. Moyer made an ironic comment regarding the “holdout problem” in debt exchanges. For those unfamiliar, when a company proposes a debt exchange existing holders are often asked to take a haircut on their principal amount, among other things, in exchange for the company improving its balance sheet and hopefully staying out of bankruptcy court. However, assuming the exchange is successful bondholders who do not exchange will be (economically) advantaged relative to their non-exchanging peers.

Paradoxically, if there are too many holdouts then the exchange will fail. While discussing this very issue, Steve lamented that when he thinks of the holdout problem, he “always pictures some New York slicksters” [as the holdouts]. I thought this was pretty ballsy considering PIMCO pulled off the mother-of-all holdouts when they backed out of the GMAC exchange at the last minute, leaving the company short of its minimum participation level. This website is about distressed debt investing.

Under no circumstances is this an offer to sell or a solicitation to buy securities discussed on this site. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. Distressed-Debt-Investing.com, its editor and/or related parties may have positions in companies discussed. All data, information and opinions are subject to change without notice. Copyright © Reorg Research, Inc.

Distressed securities are over companies or government entities that are experiencing financial or operational distress,, or are under. As far as debt securities, this is called distressed debt. Purchasing or holding such distressed-debt creates significant risk due to the possibility that bankruptcy may render such securities worthless (zero recovery). The deliberate investment in distressed securities as a strategy while potentially lucrative has a significant levels of risk as the securities may become worthless. To do so requires significant levels of resources and expertise to analyze each instrument and assess its position in an issuer's capital structure along with the likelihood of ultimate recovery. Distressed securities tend to trade at substantial discounts to their intrinsic or and are therefore considered to be below investment grade.

This usually limits the number of potential investors to large institutional investors—such as hedge funds, private equity firms and investment banks or specialist firms. In 2012,, an expert on bankruptcy theory, estimated that there were 'more than 200 financial institutions investing between $350–400 billion in the distressed debt market in the United States'.

Contents • • • • • • • • • • • • • • • History [ ] The market developed for distressed securities as the number of large public companies in financial distress increased in the 1980s and early 1990s. In 1992 Altman, who developed the formula for predicting bankruptcy in 1968, estimated 'the market value of the debt securities' of distressed firms as 'approximately $20.5 billion, a $42.6 billion in face value'. By 1993 the investment community had become increasingly interested in the potential market for distressed firms' debt.

At that time distressed securities 'yielded a minimum ten percent over comparable maturity of. Adding with public registration rights allows private bank debt and trade claims of defaulted and distressed companies to bring the total book value of defaulted and distressed securities to $284 billion, a market value of $177 billion.' Investment strategy [ ] The distressed securities investment strategy exploits the fact many investors are unable to hold securities that are below. Some investors have deliberately used distressed debt as an, where they buy the debt at a deep discount and aim to realize a high return if the company or country does not go bankrupt or experience defaults. The major buyers of distressed securities are typically large institutional investors, who have access to sophisticated risk management resources such as, and units of. Firms that specialize in investing in distressed debt are often referred to as. Investors in distressed securities often try to by which the issuer restructures its debt, narrows its focus, or implements a plan to turn around its operations.

Investors may also invest new capital into a distressed company in the form of debt or equity. According to a 2006 report by, a professor of finance at the, distressed debt investments earned well above average returns in 2006 and there were more than 170 institutional distressed debt investors. These institutions used 'very strong and varied strategies including the traditional passive and arbitrage plays, direct lending to distressed companies, active-control elements, foreign investing, emerging equity purchases and equity plays during the reorganization of a firm in bankruptcy'. The most common distressed securities are and.

While there is no precise definition, with a in excess of 1,000 over the risk-free rate of return (e.g., ) are commonly thought of as being distressed. Distressed securities often carry ratings of CCC or below from agencies such as, and.

Risk management [ ] By 2006, the increased popularity in distressed debt led to an increase in the number of benchmark performance indexes. Highly specialized risk analysts and experts in credit are key to the success of alternative investments such as distressed debt investment. They depend on accurate market data from institutions such as and -based Gravitas, which combines risk management software with sophisticated risk analysis using advanced analytics and modeling. They produce customized scenarios that assess the risk impact of market events. Gravitas uses Risk Analytics technology (formerly Algorithmics), which is also used by major banks, to help hedge funds meet regulatory requirements and optimize investment decisions.

When companies enter a period of, the original often sell the debt or equity securities of the issuer to a new set of buyers. Private investment partnerships such as have been the largest buyers of distressed securities. By 2006, hedge funds have purchased more than 25% of the high-yield market’s supply to supplement their more traditional defaulted debt purchases. By 2006, 'new issues rated CCC to CCC- were at an all time high of $20.1 billion'.

Other buyers include,, firms and specialized debt funds such as. The has the most developed market for distressed securities.

The international market, especially in, has become more active in recent years as the amount of has increased, capital standards for banks have become more stringent, the accounting treatment of has been standardized, and have been modernized. [ ] Typically, the investors in distressed securities must make an assessment not only of the issuer's ability to improve its operations, but also whether or not the restructuring process (which frequently requires court supervision) will benefit one class of securities more than another. Sovereign debt [ ] In 2003, Seveq observed that the emergence of the secondary debt market led to a 'modern sovereign debt litigation' and the creation of an industry of 'professional suers of foreign states'. In a 2010 article, Blackman and Mukhi examined a series of litigations employed by distressed funds investors in their lawsuits against defaulted sovereign states.

The business plan involved buying the sovereign debt instruments at a deep discount based on a very high risk, and then attempting to enforce the full claim. The strategy is most effective when the sovereign state lacks bankruptcy protection. These investors however are constrained by 'the rules that national legislatures have enacted and national courts have elaborated' to protect the vulnerable nation states from litigation. While private debtors have the resource of bankruptcy protection, sovereign states do not. There have been 'sporadic calls for a bankruptcy analogue for sovereign states' similar to the bankruptcy process for private debtors, however these calls have lacked momentum. According to the, at least twenty in Africa have been threatened with or subjected to legal actions by commercial creditors and hedge funds since 1999. Zambia [ ] In 1999, International purchased $40 million of debt owed to for the 'discounted purchase price' of $3.2 million.

In 2007, a British high court granted the company 'permission to enforce a claim for tens of millions of dollars against the '. Liberia [ ] In 2009, a British court awarded $20 million to hedge funds suing. Before the hedge funds could collect their money, the Debt Relief (Developing Countries) Act 2010 was passed in the in 2010 after Liberian president and 2011 winner appeared on the BBC program for the hedge funds to 'have a conscience and give this country a break'. That act caps what the hedge funds can collect, they had to settle with Liberia for just over $1 million, and effectively prevents them suing for exorbitant amounts of money in United Kingdom courts.

Nick Dearden of the said of the change, 'It will mean the poorest countries in the world can no longer be attacked by these reprehensible investment funds who grow fat from the misery of others'. The law was made permanent in 2011 but there are still havens for this activity, such as the and the. Congo [ ] of Brooklyn, sued for a debt from in the 1970s, which it had picked up for $3.3 million.

FG sued in,, and, which was not covered by the against hedge funds involved in sovereign debt. The blocked the attempt to sue in Hong Kong but the Jersey court awarded $100 million to FG. A series of attempts were then made in Britain and the United States by organizations such as, and the Jubilee Debt Campaign to change the laws so that hedge funds would not be able to collect on their awards. The 's Tim Jones traveled to Jersey in November 2011 to ask the government to ban hedge funds involved in sovereign debt. Easycap Capture Drivers Download on this page. He told that the Democratic Republic of the Congo 'desperately needs to be able to use its rich resources to alleviate poverty, not squander them on paying unjust debts'. When FG's owner Peter Grossman was doorstepped by freelance reporter and asked whether he thought it was fair to take $100 million for a debt he had paid $3 million for, he responded, 'Yeah I do actuallyI'm not beating up the Congo. I'm collecting on a legitimate claim'.

FG Hemisphere is attempting to enforce an ICC arbitration award for $116 million owed by the. The award was originally issued by an arbitral panel of the (ICC) in favor of DD of in the amount of $39 million and then sold to FG Hemisphere.

The award had been issued by the ICC in respect of unpaid construction contracts pursuant to which Energoinvest supervised construction of high-tension power lines, which are still in service, for transmission of power from the in the Congo—then known as. The chief of 's financial police said, 'Of course it was illegal', referring to Energoinvest's sale of assets to FG Hemisphere, noting that the man who brokered the sale, former, 'should go to jail'. Peru [ ] In 1983, was in economic distress and had large amounts of external debt. In 1996, the nation restructured its debts. The original loans were exchanged for, dollar-denominated bonds issued in the original amount of the loans.

's, a New York-based hedge fund, purchased $20.7 million worth of defaulted loans made to Peru for a discounted price of $11.4 million. Elliott Associates, holding the only portion of Peru's debt remaining outside the restructure, sued Peru and won a $58 million settlement. Unable to pay the $58 million, Peru, continued to repay creditors that held Brady Bonds. Elliott filed an injunction to prevent Peru from paying off its restructured debt without also paying Elliott. It was argued that Peru violated the ' clause, which states that no creditor can be given preferential treatment. Argentina [ ] In 2001, on roughly $81 billion.

NML Capital, LTD., a hedge fund that is a subsidiary of, purchased Argentine debt on a for a lower price. Ninety-two percent of creditors restructured in 2005 and 2010 for roughly $.30 on the dollar. NML Capital rejected the proposal and sued Argentina for the full amount in New York State courts. NML Capital's main argument is that the '— for 'on equal footing'—clause in the original contract requires Argentina to pay back all of its creditors, including those who did not agree to restructure, if it paid back one creditor. Since Argentina had already begun to repay the creditors that restructured, Elliot argued that it also deserved to be paid back. On October 2, 2012,, a hedge fund based in the, which held Argentine debt not included in, impounded the, an Argentine Navy training ship in,. The Ghanaian court held that Argentina had waived sovereign immunity when it contracted the being enforced.

In November 2012, the New York State Court ruled in favor of Elliot and the other holdouts on the merits of the pari passu argument, and ordered Argentina to pay $1.3 billion on December 15—the very same date that Argentina was supposed to pay the creditors who had agreed to the restructure. An appeals court heard oral arguments on February 27, and in June 2014, the rejected Argentina's appeal. The reported on an special meeting on July 3, 2014, among foreign ministry officials, in, to discuss the situation.

The resolution was passed with the support of all OAS member states other than the United States and Canada. In July 2014, a U.S. Federal judge ruled in favor of NML Capital Ltd., a unit of Michael Sheehan's Elliott Management, against.

The country owes its creditors more than $1.3 billion. According to Mark Weidemaier, a law professor at the, the ruling was one of 'the most significant litigation victories that a holdout creditor has ever achieved' in the realm of sovereign debt. A July 2014 article by Adam J. Levitin argued that the relationship between distressed securities investors and the U.S. Court system should be revisited. He claimed that while these distressed debt can choose to 'play the game' and 'put their head in the mouth of the ', the U.S. Courts should not choose to.

See also [ ]. • Lemke, Lins, Hoenig & Rube, Hedge Funds and Other Private Funds: Regulation and Compliance, §1:2 (Thomson West, 2014 ed.).

African Development Bank Group. Retrieved 28 July 2014. Retrieved 2014-07-28. • Jones, Meirion (2010-04-08)..

Retrieved 2013-10-15. The Guardian. 15 November 2011. Retrieved 2013-10-15. • Palast, Greg; O'Kane, Maggie; Madlena, Chavala (15 November 2011).. The Guardian. Retrieved 2013-10-15.

• ^ Jones, Meirion (18 July 2012).. • Stewart, Heather (8 August 2009).. The Guardian. Retrieved 5 March 2013. • Moffett, Mathew (April 16, 2010)..

Wall Street Journal. Retrieved 5 March 2013. Overy and Allen Global Law Intelligence Unit. Retrieved 5 March 2013. Royal Courts of Justice. April 2, 2010.

Retrieved October 19, 2012. • Emily Schmall (October 19, 2012).. New York Times. Retrieved October 19, 2012.

•, AFP wire, June 23, 2014 • Main, Alexander,, CEPR website, July 9, 2014 • ^. References [ ] • Altman, Edward I. (April 1990), The Altman-Foothill Report on Investing in Distressed Securities: The Anatomy of Defaulted Debt and Equities, Foothill Corporation This report was the basis so Altman's 1991 publication entitled Distressed Securities. • Altman, Edward I. (October 1992), (PDF), Foothill Corporation, Los Angeles, retrieved 29 July 2014 Altman was commissioned by The Foothill Group to prepare a series of “White Papers” on Distressed Debt Markets in 1990 and 1992.

• (July 2000). (PDF): 15–22. Retrieved 28 July 2014. • Altman, Edward I. (2002), The Market for Distressed Securities and Bank Loans, the Altman-Foothill Report II, Los Angeles • Altman, Edward I.; Swanson, Jeffrey (February 2007). (PDF) (Report).

Special Report. New York: New York University Salomon Center, Leonard N. Install Windows 8 On Socket 478. Stern School of Business.

• Altman, Edward I. (17 October 2012), (PDF), retrieved 28 July 2014 • Altman, Edward I. (3 December 2013), (PDF), retrieved 31 July 2013 • Blackman, Jonathan I.; Mukhi, Rahul (2010).. Law and Contemporary Problems.

Retrieved 30 July 2014. Barclay Hedge. Retrieved 28 July 2014. • Celarier, Michelle (26 March 2012),, CNN Money •, Debt Advisory International (DAI), nd, retrieved 29 July 2014 • Hotchkiss, Edith; Mooradian, Robert (1997), (PDF), Journal of Financial Economics, 43: 401–443,: This article investigated the role of vulture investors in a sample of 288 US firms that defaulted on their public debt from 1980-1993. • John, Kose (22 September 1993),, Financial Management via HighBeam Research, retrieved 29 July 2014 • Krueger, Anne O. (April 2002), 'A New Approach to Sovereign Debt Restructuring', International Monetary Fund, Washington, D.C. • Lemke, Thomas P.; Lins, Gerald T.; Hoenig, Kathryn L.; Rube, Patricia S.

Hedge Funds and Other Private Funds: Regulation and Compliance. Thomson West. • Ineichen, Alexander M. Absolute Returns: the risks and opportunities of hedge fund investing. John Wiley & Sons. 18 April 2012.

Retrieved 28 July 2014. • Groenfeldt, Tom (24 June 2013)..

Retrieved 8 August 2013. • Ineichen, Alexander M.

Absolute Returns: the risks and opportunities of hedge fund investing. John Wiley & Sons. • Levitin, Adam (29 July 2014),, Wall Street Journal, The Examiners, retrieved 30 July 2014 • Moore, Jina (22 March 2014),, Lusaka, Zambia, retrieved 29 July 2014 •. The Guardian. 15 November 2011. Retrieved 10 June 2012. • Seager, Ashley (25 April 2007),,, retrieved 29 July 2014 • Seveg, Alon (2003), 'Investment: When Countries go Bust: Proposals for Debtor and Creditor Resolution', International Business and Trade, Asper Review, 25 • Slater, Joanna (8 July 2014)..

Globe Advisor. Retrieved 28 July 2014. • Smith, Adam (1776), Wealth of Nations • Steger, Isabella (7 August 2013).. Wall Street Journal. Retrieved 8 August 2013. • 'Group Overview'.

Missing or empty url= (); access-date= requires url= () Further reading [ ] • Altman, Edward I. (1991), Distressed Securities, Chicago: Probus Publishing • Owsley, Henry F.; Kaufman, Peter S.

Distressed Investment Banking: To the Abyss and Back. Beard Books..

• Moyer, Stephen G. Distressed Debt Analysis: Strategies for Speculative Investors.

Ross Publishing.. • Whitman, Martin J.; Diz, Fernando (2009). Distress Investing: Principles and Technique. John Wiley & Sons.. • Rosenberg, H. (1992), The Vulture Investor, New York: Wiley and Sons Inc.

External links [ ] • Altman, Edward I.; Swanson, Jeffrey (February 2007). (PDF) (Report). Special Report. New York University Salomon Center, Leonard N. Stern School of Business.

• • from VCExperts.com.