Financial reform bill could hurt distressed debt investors
Tue May 4, 2010
A relatively new proposal in the Senate bill threatens to penalize buyers of distressed debt. “This uncertainty likely will inhibit investors from investing in, providing capital to, or otherwise doing business with, financially weak or weakening firms,” says the MFA.
As the 1,400-page Senate bill on financial reform makes its
way through Congress, hedge funds are increasingly worried
about proposed bankruptcy rules for failed financial
institutions that could make life difficult for distressed debt
The latest proposed legislation would give the Federal Deposit
Insurance Corporation wide latitude in determining how to treat
what it terms "similarly situated creditors" when a financial
As distressed debt investors, hedge funds are likely to be
those creditors. "We're really flummoxed as to...
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