Re: Explain \"buying debt\"
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
whats the relative price volatility of corporate debt after a chapter 11 files? i'd think it would rise significantly.
[/ QUOTE ]
This depends entirely on the pre-filing capital structure of the entity, and whether in a reorganization, you're above or below the cramdown/pivot security.
[/ QUOTE ]
what is a cramdown/pivot security? is that the security that is in between the first lein creditors and the bondholders? probably not since that is a guess outta my ass but i am curious as to how that goes down.
no pun.
thanks,
Barron
[/ QUOTE ]
the more senior securities can force the plan of reorg to go through even if the more junior securities are against it. that's called a cram-down. "The Vulture Investors" is a great book that shows how all this goes down.
|