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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (94278)	1/30/2002 9:23:28 AM
From: Knighty Tin	Respond to of 132070

Wayne, In general, nothing is standard. Senior debt usually has some assets identified as collateral. However, the courts don't always agree with that designation of assets. For several reasons. Perhaps the bank has a member on the board and it looks like an insider sweetheart scam. Or, the bankrupt co. pulled a "Producers" and collateralized an asset more than once. I had a boss who did that back in the 80s. Whoa, they get real mad when they catch you doing that. He did some time in Club Fed. So, you have lawyers from senior debt holders arguing that they have absolute control of certain assets and lawyers from unsecured and subordinated creditors saying "wait a second. What about..." Generally, the JPMs and BACs of the world have better lawyers and more financial stamina than the subordinated bond holders. The one thing that is good is that the court has a responsibility to conserve assets while this is going on, so the lawyers are pretty much straight contingency with no ongoing fees sucking up assets. I have seen some of these deals cleared in a month, but in a biggie, years is more likely. Meanwhile, the bonds trade on every argument heard in court.