Are Hedge Funds Different from Other Creditors?
by Tom Vanderslice
Marathon Asset Management; New York
David Lorry
Chrysalis Capital Partners L.P.; Philadelphia
Peter V. Pantaleo
Simpson Thacher & Bartlett LLP; New York
Eric Reehl
Plainfield Asset Management; Greenwich, Conn.
Hon. James M. Peck
U.S. Bankruptcy Court; New York
More liquidity in the market means more options for the distressed debtor, and thus less distress. Borrowers are able to refinance problems and thus often buy time to address them. Hedge funds are willing to provide rescue financing on more aggressive terms in exchange for upside reward. An ROI focus creates a heightened appetite for equity and thus more flexibility for debtors. Rights offerings, driven by hedge fund money, are now an important source of exit financing.
Read the full article. (Material from 2007 Annual Spring Meeting)