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BusinessInsider – Hedge funds and investment banks are trading Lehman bankruptcy claims. And it’s not just a matter of a couple of distressed debt funds buying the claims—it really looks like they are being actively traded.
Credit Suisse, for instance, bought a $423 million claim from Citadel recently. And now it is looking to sell a $1 billion claim, according to Bloomberg.
We’re not quite sure how this market is working yet or how actively the claims are being traded. According to Bloomberg, Elliott Management, King Street Capital and Paulson & Co collectively have accumulated $13 billion of claims against Lehman. Silver Point Capital is also a buyer.
West Palm Beach (HedgeCo.net) - Morrison & Foerster LLP is announced the election of ten new lawyers into their partnership, including specialists in venture capital, hedge funds, bio-technology, patents, corporate transactions and chapter 11 bankruptcy, among others. Their election is effective January 1, 2009.
“We have elected an exceptional group of lawyers to the partnership. This year’s newly elected partners reflect continued investment in our distinguishing practice strengths and our international reach,” said Keith Wetmore, Chairman of Morrison & Foerster. “Our new partners have demonstrated a commitment to client service and legal excellence. We are confident that they will make tremendous contributions to our clients’ success and our Firm’s progress in the years ahead.”
Elected as Partner Thomas M. Devaney, a member of the Business Department, will be resident in the New York office. Devaney specializes in private equity fund formation and investment, representing a variety of domestic and international private equity funds, including real estate funds, venture capital funds, and debt funds, in addition to hedge funds with a broad range of investment strategies.
The other lawyers elected as Partners are; Anders T. Aannestad, Jonathan Bockman, Christopher B. Eide, James M. Halstead, Rebekah Kaufman, David E. Melaugh, James J. Mullen III, Ph.D., Norman S. Rosenbaum, and Ivan G. Smallwood, a resident in the Tokyo office.
Telegraph.co.uk – Industry sources say private equity and distressed debt specialists have raised about $26bn (£17bn) since the start of October, with some 80pc coming from hedge funds.
Distressed debt funds, which buy debt that is trading at a discount because the borrower is at risk of defaulting, have been around for years but specialists are looking forward to a bonanza year in 2009.
Among the biggest distressed debt fund raisings since October have been Oaktree, which has secured $10.5bn, Towerbrook with $2.75bn, Intermediate Capital with $1.5bn, and Alchemy with $1bn. Hedge funds are also aiming to buy distressed debt directly from banks that are under pressure to offload liabilities to shore up their balance sheets.
Secondary debt, even senior loan notes, often trade below 70p in the pound and yield 25pc over five years if the debt is held – and survives – to maturity. If a company is strugglings with its covenants, debt holders can strike debt-for-equity swaps in return for keeping a company afloat – often a cost effective way of getting a seat at the table or control of a business.
