Publications

Distressed and Vulture Funds Structure and Formation

Spring 2005
Private Equity Developments - Spring 2005

Distressed and vulture funds encompass a range of investment strategies of varying levels of liquidity. Assets may include: actively traded debt and equity securities of publicly registered issuers; "lender of last resort" securities of troubled issuers; largely illiquid assets relating to deeply troubled or already bankrupt issues, including bankruptcy claims; and instruments purchased for hedging purposes, including swaps, forwards and other derivatives. Even in funds with an illiquid focus, assets are likely to comprise both large, controlling blocks of interests in an issuer and smaller, "toe-hold" positions, purchased in the hope of eventually achieving greater control, which are often abandoned or resold before a larger position is amassed.