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

To: Knighty Tin who wrote (94867)	3/7/2002 9:47:07 AM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

KT, How much influence do bondholders have over the timing of a bankruptcy filing? Assume a company is struggling, but it is not yet totally clear whether it will make it or not. Given some probability that it won't make it, it could well be argued it is often in the interests of bondholders to go BK as soon as possible so they can recover as much cash as possible or take an equity stake that would be debt free. However, since it is still not clear, it could also be argued that bondholders might often push for a premature BK so they can get an equity stake in a company with terrific prospects at a bargain price. I understand the banker's position in situations like this a little better. They can simply call in their loans and force whatever they think is in their best interests. But I do not understand the process that occurs between company management and bondholders very well.