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 di�erence 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?

Are HEDGE

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ACME

ACME

PASSIVE ACTIVE

visit managedfunds.org

ACME

WHAT IS distressed debt investing?

WHO invests in distressed debt?

CAFE

@MFAUpdates