Vulture Investing: Best Before or After The Bankruptcy?
Absent a stalking horse bidder, control over a bankrupt company is given to its debtholders. That's always seemed counter intuitive to me, since the debtholder population usually consists of varied species of hedge funds, lenders, and investors, none of which have a specific mandate or know-how to run a company. It's a curious situation which often results in a rapid sell-off. Sometimes buyout firms are hesitant to invest in a bankruptcy-bound company's debt, or as a stalking horse bidder, but wait till this moment to bid. I spoke with Jennifer Feldsher, partner in the restructuring group at Bracewell Giuliani, about advantages of waiting versus diving in early. When will the LBO-backed busts which have fallen into the arms of their lenders come to market? In my experience so far, the traditional lenders aren't interested in holding equity after restructuring and want a very quick exit. Those companies end up ...
