(Bloomberg) Sears Holdings Corp.’s latest attempt to raise cash and stave off liquidation is hinging on a complex — and perhaps shrewd — maneuver to create a bidding war among derivatives traders who wagered hundreds of millions of dollars on the retailer’s failure. The bankrupt department-store chain asked a judge to let it auction off about $900 million of notes that are essentially loans from one Sears unit to another. Normally, the company would likely find few takers for the debt. But because of arcane rules in the credit-default swaps market, the notes are proving to be a key factor in determining how much hedge funds and other investors get paid on some $400 million of default insurance they purchased before the bankruptcy.
Sears’s Latest Hope for Cash: Bidding War Among CDS Traders
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