a primer on distressed debt investing infographic
Click here to load reader
Post on 06-May-2015
Embed Size (px)
DESCRIPTIONA Primer on Distressed Debt Investing provides easy to understand visual depictions of how distressed debt investing works and explains how these investors often work alongside financially distressed companies to ensure a successful restructuring or bankruptcy proceeding. It also illustrates how distressed debt investments can help provide a number of positive results, including increased liquidity, a positive impact on overall company value, a higher degree of debt recovery, and relief of financial constraints.
- 1.HOW do you invest in it? It is a strategy in which an investor purchases debt of a financially distressed or insolvent company with the hopes of realizing a financial return. DISTRESSED INVESTMENTS INCLUDE: Investors buy debt instruments issued by a financially distressed or insolvent company from its early creditors and debt holders, or on the secondary market. DISTRESSED DEBT INVESTORS ARE CHARACTERIZED AS EITHER PASSIVE OR ACTIVE. WHAT difference does it make? Recent studies have shown that when a hedge fund is involved in a bankruptcy proceeding or restructuring, there is a greater probability of a successful financial recovery with benefits to creditors, shareholders, and the company itself. DISTRESSED DEBT INVESTMENT CAN HELP PROVIDE: COMPANY DEBT LOANS & BONDS VENDOR & TRADE CLAIMS Investors buy debt instruments in the hope of realizing a return through price appreciation determined by the actions of others. Investors participate in the restructuring or bankruptcy process, working directly with company management or other creditors to ensure a successful outcome. The majority of investors involved in distressed debt strategies are part of the alternative investment industry. THESE INVESTORS OFTEN WORK ALONGSIDE THE FINANCIALLY DISTRESSED COMPANY TO EXECUTE A SUCCESSFUL RESTRUCTURING OR BANKRUPTCY PROCEEDING. LIQUIDITY BALANCE OF POWER DURING THE BANKRUPTCY & RESTRUCTURING PROCESS BALANCE OF POWER DURING THE BANKRUPTCY AND RESTRUCTURING PROCESS HIGHER DEGREE OF DEBT RECOVERY HIGHER PROBABILITY OF COMPANIES EMERGING FROM BANKRUPTCY POSITIVE IMPACT ON OVERALL COMPANY VALUE RELIEF OF FINANCIAL CONSTRAINTS DEBT INVESTING Want to know more? ACMEACME ACME ACME PASSIVE ACTIVE visit managedfunds.org ACME WHAT IS distresseddebt investing? WHO invests in distressed debt? CAFE @MFAUpdates