A comprehensive guide to distress investing around the world Increasingly, corporate rehabilitation is more interesting than corporate liquidation to governments and capital markets. Following this trend, a mezzanine industry of mutual funds, hedge funds, and private investors has stepped up to fill the role of the traditional corporate lender. Distress Investing puts this topic in perspective and covers the essential aspects of this discipline–from its theoretical underpinnings to its practical applications. The book features cases studies of some of the biggest distress investing situations,…mehr
A comprehensive guide to distress investing around the world Increasingly, corporate rehabilitation is more interesting than corporate liquidation to governments and capital markets. Following this trend, a mezzanine industry of mutual funds, hedge funds, and private investors has stepped up to fill the role of the traditional corporate lender. Distress Investing puts this topic in perspective and covers the essential aspects of this discipline–from its theoretical underpinnings to its practical applications. The book features cases studies of some of the biggest distress investing situations, including Kmart and Pacific Gas & Electric. From the recent changes to U.S. bankruptcy code and creditor rights to cash bailouts, readers will learn how to analyze distressed situations such as pricing issues, arbitrage opportunities, tax disadvantages, and the reorganization of funding plans. Written by the leading practitioner of distress investing and coauthored by a leading academic in the field, this book is certain to become the bible on this topic for professional investors and students alike. Martin J. Whitman (New York, NY) is Chairman and Co CIO of Third Avenue Management LLC. He is also the author of Value Investing (978 0 471 16292 6) and The Aggressive Conservative Investor (978 0 471 76805 0), from Wiley. Fernando Diz (Syracuse, NY) is the Martin J. Whitman Associate Professor of Finance and Director of The Ballentine Investment Institute at Syracuse University.Hinweis: Dieser Artikel kann nur an eine deutsche Lieferadresse ausgeliefert werden.
MARTIN J. WHITMAN is Chairman and co-CIO of Third Avenue Management LLC. He has taught courses in value investing and distressed investing for the past thirty years at the Schools of Management at both Syracuse University and Yale University. Whitman is also the author of the Wiley titles Value Investing and The Aggressive Conservative Investor. FERNANDO DIZ is the Martin J. Whitman Associate Professor of Finance and Director of the Ballentine Investment Institute at Syracuse University. His research specialties are in the areas of trading, derivative securities, and value and distress investing. Diz has written for the Journal of Futures Markets, the Review of Financial Studies, and the Journal of Alternative Investments.
Inhaltsangabe
Foreword xiii Preface xv Acknowledgments xxii Part One The General Landscape Of Distress Investing Chapter 1 The Changed Environment 3 Trends in Corporate Debt Growth and Leverage before the Financial Meltdown of 2007-2008 4 Junk Bonds and the Levering-Up Period 6 The Syndicated Loan Market and Leveraged Loans 12 Financial Meltdown of 2007-2008 16 Principal Provisions of the 2005 Bankruptcy Act as They Affect Chapter 11 Reorganizations of Businesses 22 Chapter 2 The Theoretical Underpinning 27 What Market? 27 Toward a General Theory of Market Efficiency 29 External Forces Influencing Markets Explained 32 What Risk? 34 Capital Structure and Credit Risk 38 Valuation 39 The Company as a Stand-Alone Entity 41 Control and Its Vital Importance 42 Chapter 3 The Causes of Financial Distress 43 Lack of Access to Capital Markets 44 Deterioration of Operating Performance 46 Deterioration of GAAP Performance 48 Large Off-Balance-Sheet Contingent Liabilities 51 Chapter 4 Deal Expenses and Who Bears Them 53 Attorneys and Financial Advisers' Compensation Structure and the Distribution of the Fee Pie 54 Time in Chapter 11 and Number of Legal Firms Retained 66 Determinants of Legal Fees and Expenses 67 Determinants of Financial Advisers' Fees and Expenses 68 Can Professional Costs Be Excessive? 68 Appendix 69 Chapter 5 Other Important Issues 71 Management Compensation and Entrenchment 71 Tax and Political Disadvantages 73 Chapter 6 The Five Basic Truths of Distress Investing 77 Truth 1: No One Can Take Away a Corporate Creditor's Right to a Money Payment Outside of Chapter 11 or Chapter 7 78 Truth 2: Chapter 11 Rules Influence All Reorganizations 82 Truth 3: Substantive Characteristics of Securities 84 Truth 4: Restructurings Are Costly for Creditors 86 Truth 5: Creditors Have Only Contractual Rights 87 Part Two Restructuring Troubled Issuers Chapter 7 Voluntary Exchanges 91 Problems with Voluntary Exchanges 92 The Holdout Problem Illustrated 93 Making a Voluntary Exchange Work 94 Tax Disadvantages of a Voluntary Exchange versus Chapter 11 Reorganization 95 Chapter 8 A Brief Review of Chapter 11 99 Liquidations and Reorganizations 100 Starting a Case: Voluntary versus Involuntary Petitions 100 Forum Shopping 101 Parties in a Chapter 11 Case 101 Administration of a Chapter 11 Case 103 The Chapter 11 Plan 109 Chapter 9 The Workout Process 117 Parties and Their Differing Needs and Desires 117 Types of Chapter 11 Cases 120 Leverage Factors in Chapter 11 125 Part Three The Investment Process Chapter 10 How to Analyze: Valuation 133 Strict Going Concern Valuation 134 Resource Conversion Valuation 146 Liquidation Valuations 148 Chapter 11 Due Diligence for Distressed Issues 151 Chapter 12 Distress Investing Risks 157 Risks Associated with the Alteration of Priorities 158 Risks Associated with Collateral or Enterprise Valuation 165 Reorganization Risks 168 Other Risks 168 Chapter 13 Form of Consideration Versus Amount Of Consideration 171 Part Four Cases and Implications for Public Policy Chapter 14 Brief Case Studies of Distressed Securities, 2008-2009 177 Performing Loans Likely to Remain Performing Loans 178 Small Cases 182 Large Cases 184 Capital Infusions into Troubled Companies 184 Chapter 15 A Small Case : Home Products International 187 The Early Years 188 Growth by Acquisitions 189 Retail Industry Woes 192 The Fight for Control 195 Amendment of Indenture and Event of Default 196 The Decision: Prepackaged Chapter 11 197 Treatment of Impaired Classes under the Plan 198 Financial Means for Implementation of the Plan 199 Going-Concern and Liquidation Valuations 199 Chapter 16 A Large Reorganization Case: Kmart Corporation 203 Landlords and Unexpired Leases 204 Vendors and Critical Vendor Motions 206 Management and KERPs Pre-2005 BAPCPA 208 Fraudulent Transfers 209 Subsidiary Guarantees and Substantive Consolidation 210 Chapter 11 Committees and Out-of-Control Professional Costs 211 Blocking Positions 211 Buying Claims in Chapter 11 214 Debtor-in-Possession Financing 215 Kmart's Plan of Reorganization and Plan Investors 218 Investment Performance 222 Chapter 17 An Ideal Restructuring System 225 Feasibility and Cash Bailouts 226 Good Enough Rather Than Ideal 226 Highly Beneficial Elements in the U.S. Restructuring System 226 Goals of an Ideal Restructuring System 228 Suggested Reforms 229 Notes 233 About the Authors 238 Index 239
Foreword xiii Preface xv Acknowledgments xxii Part One The General Landscape Of Distress Investing Chapter 1 The Changed Environment 3 Trends in Corporate Debt Growth and Leverage before the Financial Meltdown of 2007-2008 4 Junk Bonds and the Levering-Up Period 6 The Syndicated Loan Market and Leveraged Loans 12 Financial Meltdown of 2007-2008 16 Principal Provisions of the 2005 Bankruptcy Act as They Affect Chapter 11 Reorganizations of Businesses 22 Chapter 2 The Theoretical Underpinning 27 What Market? 27 Toward a General Theory of Market Efficiency 29 External Forces Influencing Markets Explained 32 What Risk? 34 Capital Structure and Credit Risk 38 Valuation 39 The Company as a Stand-Alone Entity 41 Control and Its Vital Importance 42 Chapter 3 The Causes of Financial Distress 43 Lack of Access to Capital Markets 44 Deterioration of Operating Performance 46 Deterioration of GAAP Performance 48 Large Off-Balance-Sheet Contingent Liabilities 51 Chapter 4 Deal Expenses and Who Bears Them 53 Attorneys and Financial Advisers' Compensation Structure and the Distribution of the Fee Pie 54 Time in Chapter 11 and Number of Legal Firms Retained 66 Determinants of Legal Fees and Expenses 67 Determinants of Financial Advisers' Fees and Expenses 68 Can Professional Costs Be Excessive? 68 Appendix 69 Chapter 5 Other Important Issues 71 Management Compensation and Entrenchment 71 Tax and Political Disadvantages 73 Chapter 6 The Five Basic Truths of Distress Investing 77 Truth 1: No One Can Take Away a Corporate Creditor's Right to a Money Payment Outside of Chapter 11 or Chapter 7 78 Truth 2: Chapter 11 Rules Influence All Reorganizations 82 Truth 3: Substantive Characteristics of Securities 84 Truth 4: Restructurings Are Costly for Creditors 86 Truth 5: Creditors Have Only Contractual Rights 87 Part Two Restructuring Troubled Issuers Chapter 7 Voluntary Exchanges 91 Problems with Voluntary Exchanges 92 The Holdout Problem Illustrated 93 Making a Voluntary Exchange Work 94 Tax Disadvantages of a Voluntary Exchange versus Chapter 11 Reorganization 95 Chapter 8 A Brief Review of Chapter 11 99 Liquidations and Reorganizations 100 Starting a Case: Voluntary versus Involuntary Petitions 100 Forum Shopping 101 Parties in a Chapter 11 Case 101 Administration of a Chapter 11 Case 103 The Chapter 11 Plan 109 Chapter 9 The Workout Process 117 Parties and Their Differing Needs and Desires 117 Types of Chapter 11 Cases 120 Leverage Factors in Chapter 11 125 Part Three The Investment Process Chapter 10 How to Analyze: Valuation 133 Strict Going Concern Valuation 134 Resource Conversion Valuation 146 Liquidation Valuations 148 Chapter 11 Due Diligence for Distressed Issues 151 Chapter 12 Distress Investing Risks 157 Risks Associated with the Alteration of Priorities 158 Risks Associated with Collateral or Enterprise Valuation 165 Reorganization Risks 168 Other Risks 168 Chapter 13 Form of Consideration Versus Amount Of Consideration 171 Part Four Cases and Implications for Public Policy Chapter 14 Brief Case Studies of Distressed Securities, 2008-2009 177 Performing Loans Likely to Remain Performing Loans 178 Small Cases 182 Large Cases 184 Capital Infusions into Troubled Companies 184 Chapter 15 A Small Case : Home Products International 187 The Early Years 188 Growth by Acquisitions 189 Retail Industry Woes 192 The Fight for Control 195 Amendment of Indenture and Event of Default 196 The Decision: Prepackaged Chapter 11 197 Treatment of Impaired Classes under the Plan 198 Financial Means for Implementation of the Plan 199 Going-Concern and Liquidation Valuations 199 Chapter 16 A Large Reorganization Case: Kmart Corporation 203 Landlords and Unexpired Leases 204 Vendors and Critical Vendor Motions 206 Management and KERPs Pre-2005 BAPCPA 208 Fraudulent Transfers 209 Subsidiary Guarantees and Substantive Consolidation 210 Chapter 11 Committees and Out-of-Control Professional Costs 211 Blocking Positions 211 Buying Claims in Chapter 11 214 Debtor-in-Possession Financing 215 Kmart's Plan of Reorganization and Plan Investors 218 Investment Performance 222 Chapter 17 An Ideal Restructuring System 225 Feasibility and Cash Bailouts 226 Good Enough Rather Than Ideal 226 Highly Beneficial Elements in the U.S. Restructuring System 226 Goals of an Ideal Restructuring System 228 Suggested Reforms 229 Notes 233 About the Authors 238 Index 239
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