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Distressed securities

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In <a href="Corporate_finance" title="Corporate finance">corporate finance</a>, distressed securities are <a href="Security_(finance)" title="Security (finance)">securities</a> over companies or government entities that are experiencing <a href="Financial_distress" title="Financial distress">financial</a> or operational distress, <a href="Default_(finance)" title="Default (finance)">default</a>, or are under <a href="Bankruptcy" title="Bankruptcy">bankruptcy</a>.<a href="#cite_note-FOOTNOTEIneichen2002270-1">[1]</a> As far as debt securities, this is called distressed debt. Purchasing or holding such distressed-debt creates significant <a href="Financial_risk" title="Financial risk">risk</a> due to the possibility that bankruptcy may render such securities worthless (zero recovery).<a href="#cite_note-FOOTNOTEBarclay_Hedge2013-2">[2]</a>

The deliberate investment in distressed securities as a strategy, while potentially lucrative, has a significant level of risk as the securities may become worthless. To do so requires significant levels of resources and expertise to analyze each investment, the related <a href="Going_concern" title="Going concern">going concern</a> risk and assess its position in an issuer's <a href="Capital_structure" title="Capital structure">capital structure</a> along with the likelihood of ultimate recovery.<a href="#cite_note-3">[3]</a> Distressed securities tend to trade at substantial discounts to their intrinsic or <a href="Par_value" title="Par value">par value</a><a href="#cite_note-FOOTNOTEIneichen2002270-1">[1]</a> and are therefore considered to be below investment grade.<a href="#cite_note-FOOTNOTEIneichen2002270-1">[1]</a> This usually limits the number of potential investors to large institutional investors—such as <a href="Hedge_fund" title="Hedge fund">hedge funds</a>, <a href="Private_equity" title="Private equity">private equity</a> firms, <a href="Investment_bank" class="mw-redirect" title="Investment bank">investment banks</a>, and specialist <a href="Investment_firm" class="mw-redirect" title="Investment firm">investment firms</a> such as <a href="Vulture_fund" title="Vulture fund">vulture funds</a>.<a href="#cite_note-FOOTNOTEBarclay_Hedge2013-2">[2]</a>

In 2012, <a href="Edward_Altman" title="Edward Altman">Edward Altman</a>, a professor emeritus at the <a href="New_York_University_Stern_School_of_Business" title="New York University Stern School of Business">NYU Stern School of Business</a>, and an expert on bankruptcy theory, estimated that there were "more than 200 financial institutions investing between $350–400 billion in the distressed debt market in the United States".<a href="#cite_note-FOOTNOTEAltman2012-4">[4]</a>

<div class="mw-heading mw-heading2"><h2 id="History">History</h2></div>

The market developed for distressed securities as the number of large public companies in financial distress increased in the 1980s and early 1990s.<a href="#cite_note-FOOTNOTEHotchkissMooradian1997-5">[5]</a> In 1992, professor Edward Altman, who developed the <a href="Altman_Z-score" title="Altman Z-score">Altman Z-score</a> formula for predicting bankruptcy in 1968, estimated "the market value of the debt securities" of distressed firms as "is approximately $20.5 billion, a $42.6 billion in face value".<a href="#cite_note-FOOTNOTEAltman2000-6">[6]</a><a href="#cite_note-FOOTNOTEJohn1993-7">[7]</a> By 1993 the investment community had become increasingly interested in the potential market for distressed firms' debt.<a href="#cite_note-FOOTNOTEJohn1993-7">[7]</a> At that time distressed securities "yielded a minimum ten percent over comparable maturity of <a href="U.S._Treasury_bonds" class="mw-redirect" title="U.S. Treasury bonds">U.S. Treasury bonds</a>... Adding <a href="Private_debt" class="mw-redirect" title="Private debt">private debt</a> with public registration rights allows private bank debt and trade claims of defaulted and distressed companies to bring the total book value of defaulted and distressed securities to $284 billion, a market value of $177 billion."<a href="#cite_note-FOOTNOTEAltman1992-8">[8]</a><a href="#cite_note-FOOTNOTEJohn1993-7">[7]</a>

<div class="mw-heading mw-heading2"><h2 id="Investment_strategy">Investment strategy</h2></div>

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</style><div role="note" class="hatnote navigation-not-searchable">Further information: <a href="Private_equity#Distressed_securities" title="Private equity">Private equity § Distressed securities</a>, and <a href="Valuation_(finance)#Valuation_of_a_suffering_company" title="Valuation (finance)">Valuation (finance) § Valuation of a suffering company</a></div>

The distressed securities investment strategy exploits the fact many investors are unable to hold securities that are below <a href="Investment_grade" class="mw-redirect" title="Investment grade">investment grade</a>.<a href="#cite_note-FOOTNOTEIneichen2002270-1">[1]</a>

Some investors have deliberately used distressed debt as an <a href="Alternative_investment" title="Alternative investment">alternative investment</a>, where they buy the debt at a deep discount and aim to realize a high return if the company or country does not go bankrupt or experience defaults. The major buyers of distressed securities are typically large institutional investors, who have access to sophisticated risk management resources such as <a href="Hedge_fund" title="Hedge fund">hedge funds</a>, <a href="Private_equity_firms" class="mw-redirect" title="Private equity firms">private equity firms</a> and units of <a href="Investment_bank" class="mw-redirect" title="Investment bank">investment banks</a>.<a href="#cite_note-FOOTNOTEBarclay_Hedge2013-2">[2]</a><a href="#cite_note-FOOTNOTESteger2013-9">[9]</a> Firms that specialize in investing in distressed debt are often referred to as <a href="Vulture_fund" title="Vulture fund">vulture funds</a>.<a href="#cite_note-FOOTNOTEBlackmanMukhi201049-10">[10]</a><a href="#cite_note-FOOTNOTEMoore2014-11">[11]</a><a href="#cite_note-FOOTNOTEThe_Guardian2011-12">[12]</a><a href="#cite_note-FOOTNOTESeager2007-13">[13]</a>

Investors in distressed securities often try to <a href="Activist_investing" class="mw-redirect" title="Activist investing">influence the process</a> by which the issuer restructures its debt, narrows its focus, or implements a plan to turn around its operations. Investors may also invest new capital into a distressed company in the form of debt or equity.<a href="#cite_note-FOOTNOTEBarclay_Hedge2013-2">[2]</a> According to a 2006 report by <a href="Edward_Altman" title="Edward Altman">Edward Altman</a>, a professor of finance at the <a href="NYU" class="mw-redirect" title="NYU">NYU</a> <a href="Leonard_N._Stern_School_of_Business" class="mw-redirect" title="Leonard N. Stern School of Business">Stern School of Business</a>, distressed debt investments earned well above average returns in 2006 and there were more than 170 institutional distressed debt investors.<a href="#cite_note-FOOTNOTEAltmanSwanson2007-14">[14]</a> These institutions used "very strong and varied strategies including the traditional passive <a href="Buy_and_hold" title="Buy and hold">buy-and-hold</a> and arbitrage plays, direct lending to distressed companies, active-control elements, foreign investing, emerging equity purchases and equity plays during the reorganization of a firm in bankruptcy".<a href="#cite_note-FOOTNOTEAltmanSwanson2007-14">[14]</a> The most common distressed securities are <a href="Bond_(finance)" title="Bond (finance)">bonds</a> and <a href="Loan" title="Loan">bank debt</a>.

While there is no precise definition, <a href="Fixed_income_security" class="mw-redirect" title="Fixed income security">fixed-income instruments</a> with a <a href="Yield_to_maturity" title="Yield to maturity">yield to maturity</a> in excess of 1,000 <a href="Basis_point" title="Basis point">basis points</a> over the risk-free rate of return (e.g., <a href="Treasury_security" class="mw-redirect" title="Treasury security">Treasuries</a>) are commonly thought of as being distressed.<a href="#cite_note-FOOTNOTEBarclay_Hedge2013-2">[2]</a> Distressed securities often carry ratings of CCC or below from agencies such as <a href="Standard_%26_Poor's" class="mw-redirect" title="Standard & Poor's">Standard & Poor's</a>, <a href="Moody's_Investors_Service" class="mw-redirect" title="Moody's Investors Service">Moody's</a> and <a href="Fitch_Group" class="mw-redirect" title="Fitch Group">Fitch</a>.<a href="#cite_note-FOOTNOTEBarclay_Hedge2013-2">[2]</a>

<div class="mw-heading mw-heading2"><h2 id="Risk_management">Risk management</h2></div>

By 2006, the increased popularity in distressed debt <a href="Hedge_fund" title="Hedge fund">hedge funds</a> led to an increase in the number of benchmark performance indexes.<a href="#cite_note-FOOTNOTEAltmanSwanson2007-14">[14]</a> Highly specialized risk analysts and experts in credit are key to the success of alternative investments such as distressed debt investment. They depend on accurate market data from institutions such as <a href="Market_(economics)" title="Market (economics)">CDX High Yield Index</a> and <a href="India" title="India">India</a>-based Gravitas, which combines risk management software with sophisticated risk analysis using advanced analytics and modeling. They produce customized scenarios that assess the risk impact of market events. Gravitas uses <a href="IBM" title="IBM">IBM</a> Risk Analytics technology (formerly Algorithmics), which is also used by major banks, to help hedge funds meet regulatory requirements and optimize investment decisions.<a href="#cite_note-FOOTNOTEGroenfeldt2013-15">[15]</a>

When companies enter a period of <a href="Financial_distress" title="Financial distress">financial distress</a>, the original <a href="Holding_company" title="Holding company">holders</a> often sell the debt or equity securities of the issuer to a new set of buyers. Private investment partnerships such as <a href="Hedge_fund" title="Hedge fund">hedge funds</a> have been the largest buyers of distressed securities.<a href="#cite_note-FOOTNOTEBarclay_Hedge2013-2">[2]</a> By 2006, hedge funds have purchased more than 25% of the high-yield market's supply to supplement their more traditional defaulted debt purchases.<a href="#cite_note-FOOTNOTEAltmanSwanson2007-14">[14]</a> By 2006, "new issues rated CCC to CCC− were at an all time high of $20.1 billion".<a href="#cite_note-FOOTNOTEAltmanSwanson200717-16">[16]</a> Other buyers include <a href="Brokerage_firm" class="mw-redirect" title="Brokerage firm">brokerage firms</a>, <a href="Mutual_fund" title="Mutual fund">mutual funds</a>, <a href="Private_equity" title="Private equity">private equity</a> firms and specialized debt funds such as <a href="Collateralized_debt_obligation" title="Collateralized debt obligation">collateralized loan obligations</a>.

The <a href="United_States" title="United States">United States</a> has the most developed market for distressed securities. The international market, especially in <a href="Europe" title="Europe">Europe</a>, has become more active in recent years as the amount of leveraged lending has increased, capital standards for banks have become more stringent, the accounting treatment of <a href="Non-performing_loan" title="Non-performing loan">non-performing loans</a> has been standardized, and <a href="Insolvency_law" class="mw-redirect" title="Insolvency law">insolvency laws</a> have been modernized.

Typically, the investors in distressed securities must make an assessment not only of the issuer's ability to improve its operations, but also whether or not the restructuring process (which frequently requires court supervision) will benefit one class of securities more than another.

<div class="mw-heading mw-heading2"><h2 id="Sovereign_debt">Sovereign debt</h2></div>

In 2003, Seveq observed that the emergence of the secondary debt market led to a "modern sovereign debt litigation" and the creation of an industry of "professional suers of foreign states".<a href="#cite_note-FOOTNOTESeveg2003-17">[17]</a><a href="#cite_note-FOOTNOTEBlackmanMukhi201049-10">[10]</a>

In a 2010 article, Blackman and Mukhi examined a series of litigations employed by distressed funds investors in their lawsuits against defaulted sovereign states.<a href="#cite_note-FOOTNOTEBlackmanMukhi201049-10">[10]</a> The business plan involved buying the sovereign debt instruments at a deep discount based on a very high risk, and then attempting to enforce the full claim. The strategy is most effective when the sovereign state lacks bankruptcy protection. These investors however are constrained by "the <a href="Sovereign_immunity" title="Sovereign immunity">sovereign-immunity</a> rules that national legislatures have enacted and national courts have elaborated" to protect the vulnerable nation states from litigation.<a href="#cite_note-FOOTNOTEBlackmanMukhi201049-10">[10]</a>

While private debtors have the resource of bankruptcy protection, sovereign states do not.<a href="#cite_note-FOOTNOTEBlackmanMukhi201048-18">[18]</a> There have been "sporadic calls for a bankruptcy analogue for sovereign states" similar to the bankruptcy process for private debtors, however these calls have lacked momentum.<a href="#cite_note-19">[Notes 1]</a><a href="#cite_note-FOOTNOTEBlackmanMukhi2010-20">[19]</a><a href="#cite_note-FOOTNOTESmith1776-21">[20]</a><a href="#cite_note-FOOTNOTEKrueger2002-22">[21]</a>

According to the <a href="African_Development_Bank_Group" class="mw-redirect" title="African Development Bank Group">African Development Bank Group</a>, at least twenty <a href="Heavily_indebted_poor_countries" title="Heavily indebted poor countries">heavily indebted poor countries</a> in Africa have been threatened with or subjected to legal actions by commercial creditors and hedge funds since 1999.<a href="#cite_note-23">[22]</a>

<div class="mw-heading mw-heading3"><h3 id="Zambia">Zambia</h3></div>

In 1999, the US firm Donegal International purchased $40 million of <a href="Zambia" title="Zambia">Zambian</a> debt owed to <a href="Romania" title="Romania">Romania</a> for the "discounted purchase price" of $3.2 million. In 2007, a British high court granted the company "permission to enforce a claim for tens of millions of dollars against the <a href="Government_of_Zambia" class="mw-redirect" title="Government of Zambia">Government of Zambia</a>".

<div class="mw-heading mw-heading3"><h3 id="Liberia">Liberia</h3></div>

In 2009, a British court awarded $20 million to hedge funds suing <a href="Liberia" title="Liberia">Liberia</a>. Before the hedge funds could collect their money, the Debt Relief (Developing Countries) Act 2010<a href="#cite_note-24">[23]</a> was passed in the <a href="UK_parliament" class="mw-redirect" title="UK parliament">UK parliament</a> in 2010 after Liberian president and 2011 <a href="Nobel_Peace_Prize" title="Nobel Peace Prize">Nobel Peace Prize</a> winner <a href="Ellen_Johnson_Sirleaf" title="Ellen Johnson Sirleaf">Ellen Johnson Sirleaf</a> appeared on the BBC <a href="Newsnight" title="Newsnight">Newsnight</a> program for the hedge funds to "have a conscience and give this country a break".<a href="#cite_note-25">[24]</a>

That act caps what the hedge funds can collect, they had to settle with Liberia for just over $1 million, and effectively prevents them suing for exorbitant amounts of money in United Kingdom courts. Nick Dearden of the <a href="Jubilee_Debt_Campaign" class="mw-redirect" title="Jubilee Debt Campaign">Jubilee Debt Campaign</a> said of the change, "It will mean the poorest countries in the world can no longer be attacked by these reprehensible investment funds who grow fat from the misery of others". The law was made permanent in 2011 but there are still havens for this activity, such as the <a href="Channel_Islands" title="Channel Islands">Channel Islands</a> and the <a href="British_Virgin_Islands" title="British Virgin Islands">British Virgin Islands</a>.<a href="#cite_note-26">[25]</a>

<div class="mw-heading mw-heading3"><h3 id="Congo">Congo</h3></div>

<a href="FG_Hemisphere" title="FG Hemisphere">FG Hemisphere</a> of Brooklyn, sued <a href="Democratic_Republic_of_the_Congo" title="Democratic Republic of the Congo">Democratic Republic of the Congo</a> for a debt from <a href="Yugoslavia" title="Yugoslavia">Yugoslavia</a> in the 1970s, which it had picked up for $3.3 million. FG sued in <a href="Hong_Kong" title="Hong Kong">Hong Kong</a>, <a href="Australia" title="Australia">Australia</a>, and <a href="Jersey" title="Jersey">Jersey</a>, which was not covered by the <a href="UK_law" class="mw-redirect" title="UK law">UK law</a> against hedge funds involved in sovereign debt. The <a href="Government_of_the_People's_Republic_of_China" class="mw-redirect" title="Government of the People's Republic of China">Chinese government</a> blocked the attempt to sue in Hong Kong but the Jersey court awarded $100 million to FG. A series of attempts were then made in Britain and the United States by organizations such as <a href="Jubilee_USA_Network" title="Jubilee USA Network">Jubilee USA Network</a>, <a href="Oxfam" title="Oxfam">Oxfam</a> and the Jubilee Debt Campaign to change the laws so that hedge funds would not be able to collect on their awards. The <a href="Jubilee_Debt_Coalition" class="mw-redirect" title="Jubilee Debt Coalition">Jubilee Debt Coalition</a>'s Tim Jones traveled to Jersey in November 2011 to ask the government to ban hedge funds involved in sovereign debt. He told <a href="The_Guardian" title="The Guardian">The Guardian</a> that the Democratic Republic of the Congo "desperately needs to be able to use its rich resources to alleviate poverty, not squander them on paying unjust debts".<a href="#cite_note-27">[26]</a>

When FG's owner Peter Grossman was doorstepped by freelance reporter <a href="Greg_Palast" title="Greg Palast">Greg Palast</a> and asked whether he thought it was fair to take $100 million for a debt he had paid $3 million for, he responded, "Yeah I do actually…I'm not beating up the Congo. I'm collecting on a legitimate claim".<a href="#cite_note-july18bbc-28">[27]</a>

FG Hemisphere is attempting to enforce an ICC arbitration award for $116 million owed by the <a href="Democratic_Republic_of_Congo" class="mw-redirect" title="Democratic Republic of Congo">Democratic Republic of the Congo</a>. The award was originally issued by an arbitral panel of the <a href="International_Chamber_of_Commerce" title="International Chamber of Commerce">International Chamber of Commerce</a> (ICC) in favor of <a href="Energoinvest" title="Energoinvest">Energoinvest</a> DD of <a href="Bosnia" class="mw-redirect" title="Bosnia">Bosnia</a> in the amount of $39 million and then sold to FG Hemisphere.<a href="#cite_note-29">[28]</a> The award had been issued by the ICC in respect of unpaid construction contracts pursuant to which Energoinvest supervised construction of high-tension power lines, which are still in service, for transmission of power from the <a href="Inga%E2%80%93Shaba_HVDC" title="Inga–Shaba HVDC">Inga–Shaba dam</a> in the Congo—then known as Zaire.

In 1983, <a href="Peru" title="Peru">Peru</a> was in economic distress and had large amounts of external debt. In 1996, the nation restructured its debts. The original loans were exchanged for <a href="Brady_Bonds" title="Brady Bonds">Brady Bonds</a>, dollar-denominated bonds issued in the original amount of the loans. <a href="Paul_Singer_(businessman)" title="Paul Singer (businessman)">Paul Singer</a>'s <a href="Elliott_Associates" class="mw-redirect" title="Elliott Associates">Elliott Associates</a>, a New York-based hedge fund, purchased $20.7 million worth of defaulted loans made to Peru for a discounted price of $11.4 million. Elliott Associates, holding the only portion of Peru's debt remaining outside the restructure, sued Peru and won a $58 million settlement. Unable to pay the $58 million, Peru, continued to repay creditors that held Brady Bonds. Elliott filed an injunction to prevent Peru from paying off its restructured debt without also paying Elliott. It was argued that Peru violated the "<a href="Pari_passu" title="Pari passu">pari passu</a>" clause, which states that no creditor can be given preferential treatment.

<div class="mw-heading mw-heading3"><h3 id="Argentina">Argentina</h3></div>

In 2001, <a href="Argentina" title="Argentina">Argentina</a> <a href="December_2001_riots_in_Argentina" title="December 2001 riots in Argentina">defaulted</a> on roughly $81 billion. NML Capital, LTD., a hedge fund that is a subsidiary of <a href="Elliott_Management_Corporation" class="mw-redirect" title="Elliott Management Corporation">Elliott Management Corporation</a>, purchased Argentine debt on a <a href="Secondary_market" title="Secondary market">secondary market</a> for a lower price. Ninety-two percent of creditors restructured in 2005 and 2010 for roughly $0.30 on the dollar.<a href="#cite_note-30">[29]</a> NML Capital rejected the proposal and sued Argentina for the full amount in New York State courts. NML Capital's main argument is that the "<a href="Pari_passu" title="Pari passu">pari passu</a>"—<a href="Latin" title="Latin">Latin</a> for "on equal footing"—clause in the original contract requires Argentina to pay back all of its creditors, including those who did not agree to restructure, if it paid back one creditor.<a href="#cite_note-31">[30]</a> Since Argentina had already begun to repay the creditors that restructured, Elliot argued that it also deserved to be paid back.

On October 2, 2012, <a href="NML_Capital_Limited" class="mw-redirect" title="NML Capital Limited">NML Capital Ltd.</a>, a hedge fund based in the <a href="Cayman_Islands" title="Cayman Islands">Cayman Islands</a>, which held Argentine debt not included in <a href="Argentine_debt_restructuring" title="Argentine debt restructuring">Argentine debt restructuring</a>,<a href="#cite_note-[2010]_EWCA_Civ_41-32">[31]</a> impounded the <a href="ARA_Libertad_(Q-2)" title="ARA Libertad (Q-2)">Libertad</a>, an Argentine Navy training ship in <a href="Tema" title="Tema">Tema</a>, <a href="Ghana" title="Ghana">Ghana</a>. The Ghanaian court held that Argentina had waived sovereign immunity when it contracted the <a href="Sovereign_debt" class="mw-redirect" title="Sovereign debt">sovereign debt</a> being enforced.<a href="#cite_note-NYT101812-33">[32]</a>

In November 2012, the New York State Court ruled in favor of Elliot and the other holdouts on the merits of the pari passu argument, and ordered Argentina to pay $1.3 billion on December 15—the very same date that Argentina was supposed to pay the creditors who had agreed to the restructure. An appeals court heard oral arguments on February 27, and in June 2014, the <a href="U.S._Supreme_Court" class="mw-redirect" title="U.S. Supreme Court">U.S. Supreme Court</a> rejected Argentina's appeal.<a href="#cite_note-au.finance.yahoo.com-34">[33]</a> The <a href="Center_for_Economic_and_Policy_Research" title="Center for Economic and Policy Research">Center for Economic and Policy Research</a> reported on an <a href="Organization_of_American_States" title="Organization of American States">Organization of American States</a> special meeting on July 3, 2014, among foreign ministry officials, in <a href="Washington%2C_D.C." title="Washington, D.C.">Washington, D.C.</a>, to discuss the situation. The resolution was passed with the support of all OAS member states other than the United States and Canada.<a href="#cite_note-35">[34]</a>

In July 2014, a U.S. federal judge ruled in favor of NML Capital Ltd., a unit of Michael Sheehan's Elliott Management, against <a href="Argentina" title="Argentina">Argentina</a>. The country owes its creditors more than $1.3 billion.<a href="#cite_note-FOOTNOTESlater2014-36">[35]</a> According to Mark Weidemaier, a law professor at the <a href="University_of_North_Carolina" title="University of North Carolina">University of North Carolina</a>, the ruling was one of "the most significant litigation victories that a holdout creditor has ever achieved" in the realm of sovereign debt.<a href="#cite_note-FOOTNOTESlater2014-36">[35]</a> A July 2014 article in <a href="The_Wall_Street_Journal" title="The Wall Street Journal">The Wall Street Journal</a> by <a href="Georgetown_University" title="Georgetown University">Georgetown</a> <a href="Georgetown_University_Law_Center" title="Georgetown University Law Center">Law professor</a> Adam J. Levitin argued that the relationship between distressed securities investors and the U.S. court system should be revisited. He claimed that while these distressed debt <a href="Investment_funds" class="mw-redirect" title="Investment funds">investment funds</a> can choose to "play the game" and "put their head in the mouth of the <a href="Leviathan" title="Leviathan">Leviathan</a>", the U.S. courts should not choose to.<a href="#cite_note-FOOTNOTELevitin2014-37">[36]</a>

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<ul><li><a href="Business_valuation#Option_pricing_approaches" title="Business valuation">Business valuation#Option pricing approaches</a></li>

<li><a href="Credit_risk" title="Credit risk">Credit risk</a></li>

<li><a href="Default_(finance)" title="Default (finance)">Default (finance)</a></li>

<li><a href="High-yield_debt" title="High-yield debt">High-yield debt</a></li>

<li><a href="Private_equity" title="Private equity">Private equity</a></li>

<li><a href="Financial_statements" class="mw-redirect" title="Financial statements">Financial statements</a></li>

<li><a href="Traditional_investments" title="Traditional investments">Traditional investments</a></li>

<li><a href="Vulture_fund" title="Vulture fund">Vulture fund</a></li></ul>

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<div class="mw-heading mw-heading2"><h2 id="Notes">Notes</h2></div>

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<li id="cite_note-19"><a href="#cite_ref-19">^</a> "When it becomes necessary for a state to declare itself bankrupt, in the same manner as when it becomes necessary for an individual to do so, a fair, open, and avowed bankruptcy is always the measure which is both the least dishonourable to the debtor, and least hurtful to the creditor." Adam Smith (1776)

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</ol></div></div>

<div class="mw-heading mw-heading2"><h2 id="Citations">Citations</h2></div>

<li id="cite_note-FOOTNOTEIneichen2002270-1">^ <a href="#cite_ref-FOOTNOTEIneichen2002270_1-0">a</a> <a href="#cite_ref-FOOTNOTEIneichen2002270_1-1">b</a> <a href="#cite_ref-FOOTNOTEIneichen2002270_1-2">c</a> <a href="#cite_ref-FOOTNOTEIneichen2002270_1-3">d</a> <a href="#CITEREFIneichen2002">Ineichen 2002</a>, p. 270.

</li>

<li id="cite_note-FOOTNOTEBarclay_Hedge2013-2">^ <a href="#cite_ref-FOOTNOTEBarclay_Hedge2013_2-0">a</a> <a href="#cite_ref-FOOTNOTEBarclay_Hedge2013_2-1">b</a> <a href="#cite_ref-FOOTNOTEBarclay_Hedge2013_2-2">c</a> <a href="#cite_ref-FOOTNOTEBarclay_Hedge2013_2-3">d</a> <a href="#cite_ref-FOOTNOTEBarclay_Hedge2013_2-4">e</a> <a href="#cite_ref-FOOTNOTEBarclay_Hedge2013_2-5">f</a> <a href="#cite_ref-FOOTNOTEBarclay_Hedge2013_2-6">g</a> <a href="#CITEREFBarclay_Hedge2013">Barclay Hedge 2013</a>.

</li>

<li id="cite_note-3"><a href="#cite_ref-3">^</a> Lemke, Lins, Hoenig & Rube, Hedge Funds and Other Private Funds: Regulation and Compliance, §1:2 (Thomson West, 2014 ed.).

</li>

<li id="cite_note-FOOTNOTEAltman2012-4"><a href="#cite_ref-FOOTNOTEAltman2012_4-0">^</a> <a href="#CITEREFAltman2012">Altman 2012</a>.

</li>

<li id="cite_note-FOOTNOTEHotchkissMooradian1997-5"><a href="#cite_ref-FOOTNOTEHotchkissMooradian1997_5-0">^</a> <a href="#CITEREFHotchkissMooradian1997">Hotchkiss & Mooradian 1997</a>.

</li>

<li id="cite_note-FOOTNOTEAltman2000-6"><a href="#cite_ref-FOOTNOTEAltman2000_6-0">^</a> <a href="#CITEREFAltman2000">Altman 2000</a>.

</li>

<li id="cite_note-FOOTNOTEJohn1993-7">^ <a href="#cite_ref-FOOTNOTEJohn1993_7-0">a</a> <a href="#cite_ref-FOOTNOTEJohn1993_7-1">b</a> <a href="#cite_ref-FOOTNOTEJohn1993_7-2">c</a> <a href="#CITEREFJohn1993">John 1993</a>.

</li>

<li id="cite_note-FOOTNOTEAltman1992-8"><a href="#cite_ref-FOOTNOTEAltman1992_8-0">^</a> <a href="#CITEREFAltman1992">Altman 1992</a>.

</li>

<li id="cite_note-FOOTNOTESteger2013-9"><a href="#cite_ref-FOOTNOTESteger2013_9-0">^</a> <a href="#CITEREFSteger2013">Steger 2013</a>.

</li>

<li id="cite_note-FOOTNOTEBlackmanMukhi201049-10">^ <a href="#cite_ref-FOOTNOTEBlackmanMukhi201049_10-0">a</a> <a href="#cite_ref-FOOTNOTEBlackmanMukhi201049_10-1">b</a> <a href="#cite_ref-FOOTNOTEBlackmanMukhi201049_10-2">c</a> <a href="#cite_ref-FOOTNOTEBlackmanMukhi201049_10-3">d</a> <a href="#CITEREFBlackmanMukhi2010">Blackman & Mukhi 2010</a>, p. 49.

</li>

<li id="cite_note-FOOTNOTEMoore2014-11"><a href="#cite_ref-FOOTNOTEMoore2014_11-0">^</a> <a href="#CITEREFMoore2014">Moore 2014</a>.

</li>

<li id="cite_note-FOOTNOTEThe_Guardian2011-12"><a href="#cite_ref-FOOTNOTEThe_Guardian2011_12-0">^</a> <a href="#CITEREFThe_Guardian2011">The Guardian 2011</a>.

</li>

<li id="cite_note-FOOTNOTESeager2007-13"><a href="#cite_ref-FOOTNOTESeager2007_13-0">^</a> <a href="#CITEREFSeager2007">Seager 2007</a>.

</li>

<li id="cite_note-FOOTNOTEAltmanSwanson2007-14">^ <a href="#cite_ref-FOOTNOTEAltmanSwanson2007_14-0">a</a> <a href="#cite_ref-FOOTNOTEAltmanSwanson2007_14-1">b</a> <a href="#cite_ref-FOOTNOTEAltmanSwanson2007_14-2">c</a> <a href="#cite_ref-FOOTNOTEAltmanSwanson2007_14-3">d</a> <a href="#CITEREFAltmanSwanson2007">Altman & Swanson 2007</a>.

</li>

<li id="cite_note-FOOTNOTEGroenfeldt2013-15"><a href="#cite_ref-FOOTNOTEGroenfeldt2013_15-0">^</a> <a href="#CITEREFGroenfeldt2013">Groenfeldt 2013</a>.

</li>

<li id="cite_note-FOOTNOTEAltmanSwanson200717-16"><a href="#cite_ref-FOOTNOTEAltmanSwanson200717_16-0">^</a> <a href="#CITEREFAltmanSwanson2007">Altman & Swanson 2007</a>, p. 17.

</li>

<li id="cite_note-FOOTNOTESeveg2003-17"><a href="#cite_ref-FOOTNOTESeveg2003_17-0">^</a> <a href="#CITEREFSeveg2003">Seveg 2003</a>.

</li>

<li id="cite_note-FOOTNOTEBlackmanMukhi201048-18"><a href="#cite_ref-FOOTNOTEBlackmanMukhi201048_18-0">^</a> <a href="#CITEREFBlackmanMukhi2010">Blackman & Mukhi 2010</a>, p. 48.

</li>

<li id="cite_note-FOOTNOTEBlackmanMukhi2010-20"><a href="#cite_ref-FOOTNOTEBlackmanMukhi2010_20-0">^</a> <a href="#CITEREFBlackmanMukhi2010">Blackman & Mukhi 2010</a>.

</li>

<li id="cite_note-FOOTNOTESmith1776-21"><a href="#cite_ref-FOOTNOTESmith1776_21-0">^</a> <a href="#CITEREFSmith1776">Smith 1776</a>.

</li>

<li id="cite_note-FOOTNOTEKrueger2002-22"><a href="#cite_ref-FOOTNOTEKrueger2002_22-0">^</a> <a href="#CITEREFKrueger2002">Krueger 2002</a>.

</li>

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</style><cite class="citation web cs1"><a rel="nofollow" class="external text" href="http://www.afdb.org/en/topics-and-sectors/initiatives-partnerships/african-legal-support-facility/vulture-funds-in-the-sovereign-debt-context/">"Vulture Funds in the Sovereign Debt Context"</a>. African Development Bank Group. Retrieved 28 July 2014.</cite>

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<li id="cite_note-24"><a href="#cite_ref-24">^</a> <cite class="citation web cs1"><a rel="nofollow" class="external text" href="http://www.legislation.gov.uk/ukpga/2010/22/pdfs/ukpga_20100022_en.pdf">"Debt Relief (Developing Countries) Act 2010"</a> (PDF). Retrieved 2014-07-28.</cite>

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<li id="cite_note-25"><a href="#cite_ref-25">^</a> <cite id="CITEREFJones2010" class="citation news cs1">Jones, Meirion (2010-04-08). <a rel="nofollow" class="external text" href="http://news.bbc.co.uk/1/hi/programmes/newsnight/8610062.stm">"Newsnight - UK stops 'vulture funds' picking on poor"</a>. BBC News. Retrieved 2013-10-15.</cite>

</li>

<li id="cite_note-26"><a href="#cite_ref-26">^</a> <cite class="citation news cs1"><a rel="nofollow" class="external text" href="https://www.theguardian.com/global-development/2011/nov/15/vulture-funds-how-they-work">"Vulture funds—how do they work?"</a>. The Guardian. London. 15 November 2011. Retrieved 2013-10-15.</cite>

</li>

<li id="cite_note-27"><a href="#cite_ref-27">^</a> <cite id="CITEREFPalastO'KaneMadlena2011" class="citation news cs1">Palast, Greg; O'Kane, Maggie; Madlena, Chavala (15 November 2011). <a rel="nofollow" class="external text" href="https://www.theguardian.com/global-development/2011/nov/15/vulture-funds-jersey-decision">"Vulture funds await Jersey decision on poor countries' debts"</a>. The Guardian. London. Retrieved 2013-10-15.</cite>

</li>

<li id="cite_note-july18bbc-28"><a href="#cite_ref-july18bbc_28-0">^</a> <cite id="CITEREFJones2012" class="citation news cs1">Jones, Meirion (18 July 2012). <a rel="nofollow" class="external text" href="https://www.bbc.com/news/business-18894874">"Vulture fund's $100m DR Congo claim blocked"</a>. BBC News.</cite>

</li>

<li id="cite_note-29"><a href="#cite_ref-29">^</a> <cite id="CITEREFStewart2009" class="citation news cs1 cs1-prop-unfit">Stewart, Heather (8 August 2009). <a rel="nofollow" class="external text" href="https://web.archive.org/web/20140530080419/http://www.mathaba.net/go/?http://www.guardian.co.uk/world/2009/aug/09/congo">"Vulture fund swoops on Congo over $100m debt"</a>. The Guardian. Archived from the original on May 30, 2014. Retrieved 5 March 2013.</cite>

</li>

<li id="cite_note-30"><a href="#cite_ref-30">^</a> <cite id="CITEREFMoffett2010" class="citation news cs1">Moffett, Mathew (April 16, 2010). <a rel="nofollow" class="external text" href="https://www.wsj.com/articles/SB10001424052702303950104575185772669803524?mod=googlewsj">"Argentina Releases Debt-Swap Details"</a>. The Wall Street Journal. Retrieved 5 March 2013.</cite>

</li>

<li id="cite_note-31"><a href="#cite_ref-31">^</a> <cite class="citation web cs1"><a rel="nofollow" class="external text" href="http://www.allenovery.com/SiteCollectionDocuments/The%20pari%20passu%20clause%20and%20the%20Argentine%20case.pdf">"The pari passu clause and the Argentine case"</a> (PDF). Overy and Allen Global Law Intelligence Unit. Web. Retrieved 5 March 2013.</cite>

</li>

<li id="cite_note-[2010]_EWCA_Civ_41-32"><a href="#cite_ref-[2010]_EWCA_Civ_41_32-0">^</a> <cite class="citation web cs1"><a rel="nofollow" class="external text" href="http://www.bailii.org/ew/cases/EWCA/Civ/2010/41.html">"Republic of Argentina v. NML Capital"</a>. Royal Courts of Justice. April 2, 2010. Retrieved October 19, 2012.</cite>

</li>

<li id="cite_note-NYT101812-33"><a href="#cite_ref-NYT101812_33-0">^</a> <cite id="CITEREFEmily_Schmall2012" class="citation news cs1">Emily Schmall (October 19, 2012). <a rel="nofollow" class="external text" href="https://www.nytimes.com/2012/10/19/world/americas/seizure-of-argentine-ship-forces-shake-up.html">"Seizure of Ship From Argentina Forces Shake-Up"</a>. The New York Times. Retrieved October 19, 2012.</cite>

</li>

<li id="cite_note-au.finance.yahoo.com-34"><a href="#cite_ref-au.finance.yahoo.com_34-0">^</a> <a rel="nofollow" class="external text" href="https://au.finance.yahoo.com/news/argentina-makes-debt-case-us-063530886.html">"Argentina makes debt case in US newspapers"</a>, AFP wire, June 23, 2014

</li>

<li id="cite_note-35"><a href="#cite_ref-35">^</a> Main, Alexander, <a rel="nofollow" class="external text" href="http://www.cepr.net/index.php/blogs/the-americas-blog/us-on-its-own-once-again-at-oas-meeting-on-argentinean-sovereign-debt">"U.S. on Its Own, Once Again, at OAS Meeting on Argentinean Sovereign Debt"</a> <a rel="nofollow" class="external text" href="https://web.archive.org/web/20140714131501/http://www.cepr.net/index.php/blogs/the-americas-blog/us-on-its-own-once-again-at-oas-meeting-on-argentinean-sovereign-debt">Archived</a> 2014-07-14 at the <a href="Wayback_Machine" title="Wayback Machine">Wayback Machine</a>, CEPR website, July 9, 2014

</li>

<li id="cite_note-FOOTNOTESlater2014-36">^ <a href="#cite_ref-FOOTNOTESlater2014_36-0">a</a> <a href="#cite_ref-FOOTNOTESlater2014_36-1">b</a> <a href="#CITEREFSlater2014">Slater 2014</a>.

</li>

<li id="cite_note-FOOTNOTELevitin2014-37"><a href="#cite_ref-FOOTNOTELevitin2014_37-0">^</a> <a href="#CITEREFLevitin2014">Levitin 2014</a>.

</li>

</ol></div>

<div class="mw-heading mw-heading2"><h2 id="References">References</h2></div>

<ul><li><cite id="CITEREFAltman1990" class="citation cs2">Altman, Edward I. (April 1990), The Altman-Foothill Report on Investing in Distressed Securities: The Anatomy of Defaulted Debt and Equities, Foothill Corporation</cite> This report was the basis so Altman's 1991 publication entitled Distressed Securities.</li>

<li><cite id="CITEREFAltman1992" class="citation cs2">Altman, Edward I. (October 1992), <a rel="nofollow" class="external text" href="http://pages.stern.nyu.edu/~ealtman/dynamics.pdf">"The Market for Distressed Securities and Bank Loans"</a> (PDF), Foothill Corporation, Los Angeles, retrieved 29 July 2014</cite> Altman was commissioned by The Foothill Group to prepare a series of "White Papers" on Distressed Debt Markets in 1990 and 1992.</li>

<li><cite id="CITEREFAltman2000" class="citation journal cs1"><a href="Edward_I._Altman" class="mw-redirect" title="Edward I. Altman">Altman, Edward I.</a> (July 2000). <a rel="nofollow" class="external text" href="http://pages.stern.nyu.edu/~ealtman/Zscores.pdf">"Predicting Financial Distress of Companies"</a> (PDF): 15–22. Retrieved 28 July 2014.</cite> <code class="cs1-code">{{cite journal}}</code>: Cite journal requires <code class="cs1-code">|journal=</code> (help)</li>

<li><cite id="CITEREFAltman2002" class="citation cs2">Altman, Edward I. (2002), The Market for Distressed Securities and Bank Loans, the Altman-Foothill Report II, Los Angeles</cite><code class="cs1-code">{{citation}}</code>: CS1 maint: location missing publisher (link)</li>

<li><cite id="CITEREFAltmanSwanson2007" class="citation report cs1">Altman, Edward I.; Swanson, Jeffrey (February 2007). <a rel="nofollow" class="external text" href="http://pages.stern.nyu.edu/~ealtman/2006%20InvestPerf.pdf">The Investment Performance and Market Size of Defaulted Bonds and Bank Loans: 2006 Review and 2007 Outlook</a> (PDF) (Report). Special Report. New York: New York University Salomon Center, Leonard N. Stern School of Business.</cite></li>

<li><cite id="CITEREFAltman2012" class="citation cs2">Altman, Edward I. (17 October 2012), <a rel="nofollow" class="external text" href="http://commission.abi.org/sites/default/files/statements/17oct2012/Testimony_ABI_2012_Conference.pdf">Testimony before the ABI Chapter 11 Reform Commission</a> (PDF), retrieved 28 July 2014</cite></li>

<li><cite id="CITEREFAltman2013" class="citation cs2">Altman, Edward I. (3 December 2013), <a rel="nofollow" class="external text" href="http://people.stern.nyu.edu/ealtman/The%20Role%20of%20Distressed%20Debt%20MarketsDec03-2013.pdf">The Role of Distressed Debt Markets, Hedge Funds and Recent Trends in Bankruptcy on the Outcomes of Chapter 11 Reorganizations</a> (PDF), retrieved 31 July 2013</cite></li>

<li><cite id="CITEREFBlackmanMukhi2010" class="citation journal cs1">Blackman, Jonathan I.; Mukhi, Rahul (2010). <a rel="nofollow" class="external text" href="http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=3545&context=lcp">"The Evolution of Modern Sovereign Debt Litigation: Vultures, Alter Egos, and Other Legal Fauna"</a>. Law and Contemporary Problems. 73: 47–61. Retrieved 30 July 2014.</cite></li>

<li><cite id="CITEREFBarclay_Hedge2013" class="citation web cs1"><a rel="nofollow" class="external text" href="http://www.barclayhedge.com/research/educational-articles/hedge-fund-strategy-definition/hedge-fund-strategy-distressed-securities.html">"Understanding Distressed Securities"</a>. Barclay Hedge. 2013. Retrieved 28 July 2014.</cite></li>

<li><cite id="CITEREFCelarier2012" class="citation cs2">Celarier, Michelle (26 March 2012), <a rel="nofollow" class="external text" href="https://web.archive.org/web/20130402223527/http://finance.fortune.cnn.com/2012/03/26/paul-singer-mitt-romney/">"Mitt Romney's hedge fund kingmaker"</a>, CNN Money, archived from <a rel="nofollow" class="external text" href="http://finance.fortune.cnn.com/2012/03/26/paul-singer-mitt-romney">the original</a> on 2 April 2013, retrieved 28 July 2014</cite></li>

<li><cite id="CITEREFDebt_Advisory_International_(DAI)nd" class="citation cs2"><a rel="nofollow" class="external text" href="http://www.debtadvisory.com/about_dai/executive_team.html">"Executive team"</a>, Debt Advisory International (DAI), nd, retrieved 29 July 2014</cite></li>

<li><cite id="CITEREFHotchkissMooradian1997" class="citation cs2">Hotchkiss, Edith; Mooradian, Robert (1997), <a rel="nofollow" class="external text" href="https://web.archive.org/web/20160304103946/https://www2.bc.edu/~hotchkis/papers/vulture.pdf">"Vulture investors and the market for control of distressed firms"</a> (PDF), Journal of Financial Economics, 43 (3): 401–443, <a href="Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.1016%2Fs0304-405x%2896%2900900-2">10.1016/s0304-405x(96)00900-2</a>, archived from <a rel="nofollow" class="external text" href="https://www2.bc.edu/~hotchkis/papers/vulture.pdf">the original</a> (PDF) on 2016-03-04, retrieved 2014-07-31</cite> This article investigated the role of vulture investors in a sample of 288 US firms that defaulted on their public debt from 1980-1993.</li>

<li><cite id="CITEREFJohn1993" class="citation cs2">John, Kose (22 September 1993), <a rel="nofollow" class="external text" href="https://www.questia.com/read/1G1-14793581">Managing Financial Distress and Valuing Distressed Securities: A Survey and a Research Agenda</a></cite></li>

<li><cite id="CITEREFKrueger2002" class="citation cs2">Krueger, Anne O. (April 2002), "A New Approach to Sovereign Debt Restructuring", International Monetary Fund, Washington, D.C.</cite></li>

<li><cite id="CITEREFGroenfeldt2013" class="citation news cs1">Groenfeldt, Tom (24 June 2013). <a rel="nofollow" class="external text" href="https://www.forbes.com/sites/tomgroenfeldt/2013/06/24/distressed-debt-fund-monitors-and-hedges-its-risks-for-low-volatility">"Distressed Debt Fund Monitors And Hedges Its Risks For Low Volatility"</a>. Forbes. Retrieved 8 August 2013.</cite></li>

<li><cite id="CITEREFIneichen2002" class="citation book cs1">Ineichen, Alexander M. (2002). <a rel="nofollow" class="external text" href="https://archive.org/details/absolutereturnsr0000inei">Absolute Returns: the risks and opportunities of hedge fund investing</a>. John Wiley & Sons. p. 528. <a href="ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <bdi>0-471-25120-8</bdi>.</cite></li>

<li><cite id="lemke,_lins,_hoenig,_rube" class="citation book cs1">Lemke, Thomas P.; Lins, Gerald T.; Hoenig, Kathryn L.; Rube, Patricia S. (2014). Hedge Funds and Other Private Funds: Regulation and Compliance. Thomson West.</cite></li>

<li><cite id="CITEREFLevitin2014" class="citation cs2">Levitin, Adam (29 July 2014), <a rel="nofollow" class="external text" href="https://blogs.wsj.com/bankruptcy/2014/07/29/the-examiners-adam-levitin-on-argentina-and-distressed-investors/">"Adam Levitin on Argentina and Distressed Investors"</a>, The Wall Street Journal, The Examiners, retrieved 30 July 2014</cite></li>

<li><cite id="CITEREFMoore2014" class="citation cs2">Moore, Jina (22 March 2014), <a rel="nofollow" class="external text" href="http://america.aljazeera.com/articles/2014/3/22/the-end-of-vulturefunds.html">The end of vulture funds: Businessmen call them 'distressed debt' investments. Critics say they exploit poor countries</a>, Lusaka, Zambia, retrieved 29 July 2014</cite><code class="cs1-code">{{citation}}</code>: CS1 maint: location missing publisher (link)</li>

<li><cite id="CITEREFThe_Guardian2011" class="citation news cs1"><a rel="nofollow" class="external text" href="https://www.theguardian.com/global-development/2011/nov/15/vulture-funds-key-players?intcmp=122">"Vulture funds – the key players"</a>. The Guardian. London, UK. 15 November 2011. Retrieved 10 June 2012.</cite></li>

<li><cite id="CITEREFSeager2007" class="citation cs2">Seager, Ashley (25 April 2007), <a rel="nofollow" class="external text" href="https://www.theguardian.com/business/2007/apr/25/debt.development">"Court cuts vulture fund's claim: Zambia's debt repayment reduced by $40m; Judge says much of firm's evidence was dishonest"</a>, <a href="The_Guardian" title="The Guardian">The Guardian</a>, retrieved 29 July 2014</cite></li>

<li><cite id="CITEREFSeveg2003" class="citation cs2">Seveg, Alon (2003), "Investment: When Countries go Bust: Proposals for Debtor and Creditor Resolution", International Business and Trade, Asper Review, 25</cite></li>

<li><cite id="CITEREFForbes2012" class="citation news cs1"><a rel="nofollow" class="external text" href="https://www.forbes.com/profile/paul-singer/">"Paul Singer"</a>. Forbes. 18 April 2012. Retrieved 28 July 2014.</cite></li>

<li><cite id="CITEREFSlater2014" class="citation news cs1">Slater, Joanna (8 July 2014). <a rel="nofollow" class="external text" href="https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20140728/RBIBARGENTINAFINAL">"Paul Singer's determined stance"</a>. Globe Advisor. Retrieved 28 July 2014.</cite></li>

<li><cite id="CITEREFSmith1776" class="citation cs2">Smith, Adam (1776), Wealth of Nations</cite></li>

<li><cite id="CITEREFSteger2013" class="citation news cs1">Steger, Isabella (7 August 2013). <a rel="nofollow" class="external text" href="https://blogs.wsj.com/moneybeat/2013/08/07/distressed-debt-investors-look-toward-asia/?mod=e2tw">"Distressed-Debt Investors Eye Asia"</a>. The Wall Street Journal. Retrieved 8 August 2013.</cite></li>

<li><cite id="CITEREFSuncorp2014" class="citation web cs1">"Group Overview". Suncorp.</cite> <code class="cs1-code">{{cite web}}</code>: Missing or empty <code class="cs1-code">|url=</code> (help)</li></ul>

<div class="mw-heading mw-heading2"><h2 id="Further_reading">Further reading</h2></div>

<ul><li><cite id="CITEREFAltman1991" class="citation cs2">Altman, Edward I. (1991), Distressed Securities, Chicago: Probus Publishing</cite></li>

<li><cite id="CITEREFOwsleyKaufman2005" class="citation book cs1">Owsley, Henry F.; Kaufman, Peter S. (2005). <a rel="nofollow" class="external text" href="https://archive.org/details/distressedinvest00henr">Distressed Investment Banking: To the Abyss and Back</a>. Beard Books. <a href="ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <bdi>1-587-98267-6</bdi>.</cite></li>

<li><cite id="CITEREFMoyer2004" class="citation book cs1">Moyer, Stephen G. (2004). <a rel="nofollow" class="external text" href="https://archive.org/details/distresseddebtan00moye">Distressed Debt Analysis: Strategies for Speculative Investors</a>. J. Ross Publishing. <a href="ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <bdi>1-932-15918-5</bdi>.</cite></li>

<li><cite id="CITEREFWhitmanDiz2009" class="citation book cs1">Whitman, Martin J.; Diz, Fernando (2009). <a rel="nofollow" class="external text" href="https://archive.org/details/distressinvestin00whit">Distress Investing: Principles and Technique</a>. John Wiley & Sons. <a href="ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <bdi>978-0-470-48865-2</bdi>.</cite></li>

<li><cite id="CITEREFRosenberg1992" class="citation cs2">Rosenberg, H. (1992), The Vulture Investor, New York: Wiley and Sons Inc.</cite></li></ul>

<div class="mw-heading mw-heading2"><h2 id="External_links">External links</h2></div>

<ul><li><a rel="nofollow" class="external text" href="http://www.barclayhedge.com/research/educational-articles/hedge-fund-strategy-definition/hedge-fund-strategy-distressed-securities.html">Understanding Distressed Securities</a></li>

<li><a rel="nofollow" class="external text" href="https://web.archive.org/web/20040229214703/http://vcexperts.com/vce/library/encyclopedia/glossary_view.asp?glossary_id=287">Distressed Debt Articles</a> from VCExperts.com</li></ul>

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</style><div id="Corporate_finance_and_investment_banking430" style="font-size:114%;margin:0 4em"><a href="Corporate_finance" title="Corporate finance">Corporate finance</a> and <a href="Investment_banking" title="Investment banking">investment banking</a></div></th></tr><tr><th scope="row" class="navbox-group" style="width:1%;line-height:1.3em; text-align:left;"><a href="Capital_structure" title="Capital structure">Capital structure</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em">

<ul><li><a href="Convertible_bond" title="Convertible bond">Convertible debt</a></li>

<li><a href="Exchangeable_bond" title="Exchangeable bond">Exchangeable debt</a></li>

<li><a href="Mezzanine_capital" title="Mezzanine capital">Mezzanine debt</a></li>

<li><a href="Pari_passu#In_lending,_bankruptcy_and_default" title="Pari passu">Pari passu</a></li>

<li><a href="Preferred_stock" title="Preferred stock">Preferred equity</a></li>

<li><a href="Second_lien_loan" title="Second lien loan">Second lien debt</a></li>

<li><a href="Senior_debt" title="Senior debt">Senior debt</a></li>

<li><a href="Secured_loan" title="Secured loan">Senior secured debt</a></li>

<li><a href="Shareholder_loan" title="Shareholder loan">Shareholder loan</a></li>

<li><a href="Stock" title="Stock">Stock</a></li>

<li><a href="Subordinated_debt" title="Subordinated debt">Subordinated debt</a></li>

<li><a href="Warrant_(finance)" title="Warrant (finance)">Warrant</a></li></ul>

</div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%;line-height:1.3em; text-align:left;">Transactions (terms/conditions)</th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"></div><table class="nowraplinks navbox-subgroup" style="border-spacing:0"><tbody><tr><th scope="row" class="navbox-group" style="width:1%;line-height:1.3em;"><a href="Public_offering" title="Public offering">Equity offerings</a></th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em">

<ul><li><a href="At-the-market_offering" title="At-the-market offering">At-the-market offering</a></li>

<li><a href="Book_building" title="Book building">Book building</a></li>

<li><a href="Bookrunner" title="Bookrunner">Bookrunner</a></li>

<li><a href="Bought_deal" title="Bought deal">Bought deal</a></li>

<li><a href="Bought_out_deal" title="Bought out deal">Bought out deal</a></li>

<li><a href="Corporate_spin-off" title="Corporate spin-off">Corporate spin-off</a></li>

<li><a href="Direct_public_offering" title="Direct public offering">Direct public offering</a></li>

<li><a href="Equity_carve-out" title="Equity carve-out">Equity carve-out</a></li>

<li><a href="Follow-on_offering" title="Follow-on offering">Follow-on offering</a></li>

<li><a href="Greenshoe" title="Greenshoe">Greenshoe</a>

<ul><li><a href="Reverse_greenshoe" class="mw-redirect" title="Reverse greenshoe">Reverse</a></li></ul></li>

<li><a href="Initial_public_offering" title="Initial public offering">Initial public offering</a></li>

<li><a href="Private_placement" title="Private placement">Private placement</a></li>

<li><a href="Public_offering" title="Public offering">Public offering</a></li>

<li><a href="Rights_issue" title="Rights issue">Rights issue</a></li>

<li><a href="Seasoned_equity_offering" title="Seasoned equity offering">Seasoned equity offering</a></li>

<li><a href="Secondary_market_offering" title="Secondary market offering">Secondary market offering</a></li>

<li><a href="Underwriting" title="Underwriting">Underwriting</a></li></ul>

</div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%;line-height:1.3em;"><a href="Mergers_and_acquisitions" title="Mergers and acquisitions">Mergers and acquisitions</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em">

<li><a href="Contingent_value_rights" title="Contingent value rights">Contingent value rights</a></li>

<li><a href="Control_premium" title="Control premium">Control premium</a></li>

<li><a href="Demerger" title="Demerger">Demerger</a></li>

<li><a href="Divestment" title="Divestment">Divestment</a></li>

<li><a href="Drag-along_right" title="Drag-along right">Drag-along right</a></li>

<li><a href="Management_due_diligence" title="Management due diligence">Management due diligence</a></li>

<li><a href="Managerial_entrenchment" class="mw-redirect" title="Managerial entrenchment">Managerial entrenchment</a></li>

<li><a href="Mandatory_offer" title="Mandatory offer">Mandatory offer</a></li>

<li><a href="Minority_discount" title="Minority discount">Minority discount</a></li>

<li><a href="Pitch_book" title="Pitch book">Pitch book</a></li>

<li><a href="Pre-emption_right" title="Pre-emption right">Pre-emption right</a></li>

<li><a href="Proxy_fight" title="Proxy fight">Proxy fight</a></li>

<li><a href="Post-merger_integration" title="Post-merger integration">Post-merger integration</a></li>

<li><a href="Shareholder_rights_plan" title="Shareholder rights plan">Shareholder rights plan</a></li>

<li><a href="Special-purpose_entity" title="Special-purpose entity">Special-purpose entity</a></li>

<li><a href="Special_situation" title="Special situation">Special situation</a></li>

<li><a href="Squeeze-out" title="Squeeze-out">Squeeze-out</a></li>

<li><a href="Staggered_board_of_directors" class="mw-redirect" title="Staggered board of directors">Staggered board of directors</a></li>

<li><a href="Stock_swap" title="Stock swap">Stock swap</a></li>

<li><a href="Supermajority_amendment" title="Supermajority amendment">Supermajority amendment</a></li>

<li><a href="Corporate_synergy" title="Corporate synergy">Synergy</a></li>

<li><a href="Tag-along_right" title="Tag-along right">Tag-along right</a></li>

<li><a href="Takeover" title="Takeover">Takeover</a>

<ul><li><a href="Reverse_takeover" title="Reverse takeover">Reverse</a></li></ul></li>

<li><a href="Tender_offer" title="Tender offer">Tender offer</a></li></ul>

</div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%;line-height:1.3em;"><a href="Leverage_(finance)" title="Leverage (finance)">Leverage</a></th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em">

<ul><li><a href="Debt_restructuring" title="Debt restructuring">Debt restructuring</a></li>

<li><a href="Debtor-in-possession_financing" title="Debtor-in-possession financing">Debtor-in-possession financing</a></li>

<li><a href="Dividend_recapitalization" title="Dividend recapitalization">Dividend recapitalization</a></li>

<li><a href="Financial_sponsor" title="Financial sponsor">Financial sponsor</a></li>

<li><a href="Leveraged_buyout" title="Leveraged buyout">Leveraged buyout</a></li>

<li><a href="Leveraged_recapitalization" title="Leveraged recapitalization">Leveraged recapitalization</a></li>

<li><a href="High-yield_debt" title="High-yield debt">High-yield debt</a></li>

<li><a href="Private_equity" title="Private equity">Private equity</a></li>

<li><a href="Project_finance" title="Project finance">Project finance</a></li></ul>

</div></td></tr></tbody></table><div></div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%;line-height:1.3em; text-align:left;"><a href="Valuation_(finance)" title="Valuation (finance)">Valuation</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em">

<ul><li><a href="Accretion/dilution_analysis" title="Accretion/dilution analysis">Accretion/dilution analysis</a></li>

<li><a href="Adjusted_present_value" title="Adjusted present value">Adjusted present value</a></li>

<li><a href="Associate_company" title="Associate company">Associate company</a></li>

<li><a href="Business_valuation" title="Business valuation">Business valuation</a></li>

<li><a href="Conglomerate_discount" title="Conglomerate discount">Conglomerate discount</a></li>

<li><a href="Cost_of_capital" title="Cost of capital">Cost of capital</a>

<ul><li><a href="Weighted_average_cost_of_capital" title="Weighted average cost of capital">Weighted average</a></li></ul></li>

<li><a href="Discounted_cash_flow" title="Discounted cash flow">Discounted cash flow</a></li>

<li><a href="Economic_value_added" title="Economic value added">Economic value added</a></li>

<li><a href="Enterprise_value" title="Enterprise value">Enterprise value</a></li>

<li><a href="Fairness_opinion" title="Fairness opinion">Fairness opinion</a></li>

<li><a href="Financial_modeling" title="Financial modeling">Financial modeling</a></li>

<ul><li><a href="Free_cash_flow_to_equity" title="Free cash flow to equity">Free cash flow to equity</a></li></ul></li>

<li><a href="Market_value_added" title="Market value added">Market value added</a></li>

<li><a href="Minority_interest" title="Minority interest">Minority interest</a></li>

<li><a href="Mismarking" title="Mismarking">Mismarking</a></li>

<li><a href="Modigliani%E2%80%93Miller_theorem" title="Modigliani–Miller theorem">Modigliani–Miller theorem</a></li>

<li><a href="Net_present_value" title="Net present value">Net present value</a></li>

<li><a href="Real_options_valuation" title="Real options valuation">Real options</a></li>

<li><a href="Residual_income_valuation" title="Residual income valuation">Residual income</a></li>

<li><a href="Stock_valuation" title="Stock valuation">Stock valuation</a></li>

<li><a href="Sum-of-the-parts_analysis" title="Sum-of-the-parts analysis">Sum-of-the-parts analysis</a></li>

<li><a href="Tax_shield" title="Tax shield">Tax shield</a></li>

<li><a href="Terminal_value_(finance)" title="Terminal value (finance)">Terminal value</a></li>

<li><a href="Valuation_using_multiples" title="Valuation using multiples">Valuation using multiples</a></li></ul>

</div></td></tr><tr><td class="navbox-abovebelow" colspan="2"><div>

<ul><li> <a href="List_of_investment_banks" title="List of investment banks">List of investment banks</a></li>

<li> <a href="Outline_of_finance" title="Outline of finance">Outline of finance</a></li></ul>

</div></td></tr></tbody></table></div>

<div class="navbox-styles"></div><div role="navigation" class="navbox" aria-labelledby="Hedge_funds642" style="padding:3px"><table class="nowraplinks hlist mw-collapsible autocollapse navbox-inner" style="border-spacing:0;background:transparent;color:inherit"><tbody><tr><th scope="col" class="navbox-title" colspan="3"><div id="Hedge_funds642" style="font-size:114%;margin:0 4em"><a href="Hedge_fund" title="Hedge fund">Hedge funds</a></div></th></tr><tr><th scope="row" class="navbox-group" style="width:1%">Investment strategy</th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"></div><table class="nowraplinks navbox-subgroup" style="border-spacing:0"><tbody><tr><th scope="row" class="navbox-group" style="width:7em"><a href="Arbitrage" title="Arbitrage">Arbitrage</a> / <a href="Relative_value_(economics)" title="Relative value (economics)">relative value</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="padding:0"><div style="padding:0 0.25em">

<ul><li><a href="Capital_structure#Arbitrage" title="Capital structure">Capital structure arbitrage</a></li>

<li><a href="Convertible_arbitrage" title="Convertible arbitrage">Convertible arbitrage</a></li>

<li><a href="Market_neutral#Equity-market-neutral" title="Market neutral">Equity market neutral</a></li>

<li><a href="Fixed_income_arbitrage" title="Fixed income arbitrage">Fixed income arbitrage</a> / <a href="Fixed-income_relative-value_investing" title="Fixed-income relative-value investing">fixed-income relative-value investing</a></li>

<li><a href="Statistical_arbitrage" title="Statistical arbitrage">Statistical arbitrage</a></li>

<li><a href="Volatility_arbitrage" title="Volatility arbitrage">Volatility arbitrage</a></li></ul>

</div></td></tr><tr><th scope="row" class="navbox-group" style="width:7em"><a href="Event-driven_investing" title="Event-driven investing">Event-driven</a></th><td class="navbox-list-with-group navbox-list navbox-even" style="padding:0"><div style="padding:0 0.25em">

<ul><li><a href="Shareholder_activism" title="Shareholder activism">Shareholder activism</a></li>

<li><a href="Risk_arbitrage" title="Risk arbitrage">Risk arbitrage</a></li>

<li><a href="Special_situation" title="Special situation">Special situation</a></li></ul>

</div></td></tr><tr><th scope="row" class="navbox-group" style="width:7em">Directional</th><td class="navbox-list-with-group navbox-list navbox-odd" style="padding:0"><div style="padding:0 0.25em">

<ul><li><a href="Convergence_trade" title="Convergence trade">Convergence trade</a></li>

<li><a href="Commodity_trading_advisor" title="Commodity trading advisor">Commodity trading advisors</a> / <a href="Managed_futures_account" title="Managed futures account">managed futures account</a></li>

<li><a href="Short_(finance)" title="Short (finance)">Dedicated short</a></li>

<li><a href="Global_macro" title="Global macro">Global macro</a></li>

<li><a href="Long/short_equity" title="Long/short equity">Long/short equity</a></li>

<li><a href="Trend_following" title="Trend following">Trend following</a></li></ul>

</div></td></tr><tr><th scope="row" class="navbox-group" style="width:7em">Other</th><td class="navbox-list-with-group navbox-list navbox-even" style="padding:0"><div style="padding:0 0.25em">

<ul><li><a href="Fund_of_funds#Fund_of_hedge_funds" title="Fund of funds">Fund of hedge funds</a> / <a href="Multi-manager_investment" title="Multi-manager investment">Multi-manager</a></li></ul>

</div></td></tr></tbody></table><div></div></td><td class="noviewer navbox-image" rowspan="5" style="width:1px;padding:0 0 0 2px"><div></div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Trading</th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em">

<ul><li><a href="Algorithmic_trading" title="Algorithmic trading">Algorithmic trading</a></li>

<li><a href="Day_trading" title="Day trading">Day trading</a></li>

<li><a href="High-frequency_trading" title="High-frequency trading">High-frequency trading</a></li>

<li><a href="Prime_brokerage" title="Prime brokerage">Prime brokerage</a></li>

<li><a href="Program_trading" title="Program trading">Program trading</a></li>

<li><a href="Proprietary_trading" title="Proprietary trading">Proprietary trading</a></li></ul>

</div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Related terms</th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"></div><table class="nowraplinks navbox-subgroup" style="border-spacing:0"><tbody><tr><th scope="row" class="navbox-group" style="width:7em">Markets</th><td class="navbox-list-with-group navbox-list navbox-even" style="padding:0"><div style="padding:0 0.25em">

<ul><li><a href="Commodity_market" title="Commodity market">Commodities</a></li>

<li><a href="Derivative_(finance)" title="Derivative (finance)">Derivatives</a></li>

<li><a href="Stock_market" title="Stock market">Equity</a></li>

<li><a href="Bond_market" title="Bond market">Fixed income</a></li>

<li><a href="Foreign_exchange_market" title="Foreign exchange market">Foreign exchange</a></li>

<li><a href="Money_market" title="Money market">Money markets</a></li>

<li><a href="Structured_finance" title="Structured finance">Structured securities</a></li></ul>

</div></td></tr><tr><th scope="row" class="navbox-group" style="width:7em">Misc</th><td class="navbox-list-with-group navbox-list navbox-odd" style="padding:0"><div style="padding:0 0.25em">

<ul><li><a href="Absolute_return" title="Absolute return">Absolute return</a></li>

<li><a href="Arbitrage_pricing_theory" title="Arbitrage pricing theory">Arbitrage pricing theory</a></li>

<li><a href="Assets_under_management" title="Assets under management">Assets under management</a></li>

<li><a href="Black%E2%80%93Scholes_model" title="Black–Scholes model">Black–Scholes model</a> (<a href="Greeks_(finance)" title="Greeks (finance)">Greeks</a>: <a href="Delta_neutral" title="Delta neutral">delta neutral</a>)</li>

<li><a href="Capital_asset_pricing_model" title="Capital asset pricing model">Capital asset pricing model</a> (<a href="Alpha_(finance)" title="Alpha (finance)">alpha</a> / <a href="Beta_(finance)" title="Beta (finance)">beta</a> / <a href="Security_characteristic_line" title="Security characteristic line">security characteristic line</a>)</li>

<li><a href="Fundamental_analysis" title="Fundamental analysis">Fundamental analysis</a></li>

<li><a href="Hedge_(finance)" title="Hedge (finance)">Hedge</a></li>

<li><a href="Securitization" title="Securitization">Securitization</a></li>

<li><a href="Short_(finance)" title="Short (finance)">Short</a></li>

<li><a href="Taxation_of_private_equity_and_hedge_funds" title="Taxation of private equity and hedge funds">Taxation of private equity and hedge funds</a></li>

<li><a href="Technical_analysis" title="Technical analysis">Technical analysis</a></li></ul>

</div></td></tr></tbody></table><div></div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Investors</th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em">

<ul><li><a href="Vulture_fund" title="Vulture fund">Vulture funds</a></li>

<li><a href="Family_office" title="Family office">Family offices</a></li>

<li><a href="Financial_endowment" title="Financial endowment">Financial endowments</a></li>

<li><a href="Fund_of_funds#Fund_of_hedge_funds" title="Fund of funds">Fund of hedge funds</a></li>

<li><a href="High-net-worth_individual" title="High-net-worth individual">High-net-worth individual</a></li>

<li><a href="Institutional_investor" title="Institutional investor">Institutional investors</a></li>

<li><a href="Insurance#Insurance_companies" title="Insurance">Insurance companies</a></li>

<li><a href="Investment_banking" title="Investment banking">Investment banks</a></li>

<li><a href="Merchant_bank" title="Merchant bank">Merchant banks</a></li>

<li><a href="Pension_fund" title="Pension fund">Pension funds</a></li>

<li><a href="Sovereign_wealth_fund" title="Sovereign wealth fund">Sovereign wealth funds</a></li></ul>

</div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%">Governance</th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em">

<ul><li><a href="Fund_governance" title="Fund governance">Fund governance</a></li>

<li><a href="Standards_Board_for_Alternative_Investments" title="Standards Board for Alternative Investments">Standards Board for Alternative Investments</a></li>

<li><a href="Managed_Funds_Association" title="Managed Funds Association">Managed Funds Association</a></li></ul>

</div></td></tr><tr><td class="navbox-abovebelow" colspan="3"><div>

<ul><li>Alternative investment management companies</li>

<li> Hedge funds</li>

<li>Hedge fund managers</li>

<li> <a href="List_of_hedge_funds" title="List of hedge funds">List of hedge funds</a></li></ul>

</div></td></tr></tbody></table></div></div><div><div class="zim-footer">

This article is issued from <a class="external text" title="Last edited on 2025-07-12" href="https://en.wikipedia.org/wiki/?title=Distressed_securities&oldid=1300051959">Wikipedia</a>. The text is available under <a class="external text" href="https://creativecommons.org/licenses/by-sa/4.0/deed.en">Creative Commons Attribution-Share Alike 4.0</a> unless otherwise noted. Additional terms may apply for the media files.

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