Distressed Exchanges Becoming The Bankruptcy Of Choice For Companies

According to Moody’s a distressed exchange occurs when a distressed company offers “creditors new or restructured debt, or a new package of securities, cash or assets, that amounts to a diminished financial obligation relative to the original obligation.” Since the financial crisis, the number of these distressed exchanges has ballooned as companies try to work around a traditional bankruptcy. Deals peaked in 2015, when many oil & gas companies, reeling from crashing oil prices, found themselves struggling to keep the lights on. Hedge Fund Q3 Letters As Bloomberg reported at the end of 2015, distressed-exchange transactions accounted for 44% of US non-financial…