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Trends In Distressed Debt Investing: An Empirical Study Of Investors' Objectives, Michelle M. Harner
Trends In Distressed Debt Investing: An Empirical Study Of Investors' Objectives, Michelle M. Harner
Faculty Scholarship
Increased creditor control in chapter 11 cases has generated considerable debate over the past several years. Proponents of creditor control argue that, among other things, it promotes efficiency in corporate reorganizations. Critics assert that it destroys corporate value and frequently forces otherwise viable entities to liquidate. The increasing involvement of professional distressed debt investors in chapter 11 cases has intensified this debate. In this article, I present and analyze empirical data regarding the investment practices and strategies of distressed debt investors. Based on this data and actual case reports, I reach two primary conclusions. First, although relatively few in number, …
The Corporate Governance And Public Policy Implications Of Activist Distressed Debt Investing, Michelle M. Harner
The Corporate Governance And Public Policy Implications Of Activist Distressed Debt Investing, Michelle M. Harner
Faculty Scholarship
Activist institutional investors traditionally have invested in a company's equity to try to influence change at the company. Some of these investors, however, are now purchasing a company's debt for this same purpose. They may seek to change a company's management and board personnel, operational strategies, asset holdings or capital structure. The chapter 11 bankruptcy cases of Allied Holdings, Inc. and its affiliates exemplify the strategies of activist distressed debt investors. In the Allied cases, Yucaipa Companies, a distressed debt investor, purchased approximately 66% of Allied's outstanding general unsecured bond debt. Yucaipa used this debt position to exert significant influence …