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

To: Freedom Fighter who wrote (94868)	3/7/2002 11:24:25 AM
From: Knighty Tin	Respond to of 132070

Wayne, With bondholders it is cut and dried. If a co. misses a six month coupon, it is in default. Being in default on bonds is not like being in technical default on bank loans, where there is often a nudge, nudge, wink, wink. Many financially strong cos. occasionally have this default. But as soon as a coupon is passed, the co. is open to claims on assets from bondholders. Looking at GX as an example, they dragged things out until coupon time approached. Then it became obvious they couldn't make those payments. If you are playing the bankruptcy bond game, you want to be in bonds on a later coupon so the default comes before you miss an entire coupon. Debenture holders are in a much less protected position, though they do have a call on the general assets of the co. after senior debt holders are paid off. If a co. is burning cash, it definitely makes sense to appoint a receivor as soon as possible to conserve the assets. Mgt. has a tendency to opt for one more throw of the dice.