The Evolution Of Credit Bidding

Law360, New York (February 17, 2010, 1:46 PM ET) -- Credit bidding has gained prominence during the current restructuring cycle, in no small part due to depressed asset values and more active secondary markets for trading debt.

No longer is it simply a tactic used by distressed debt investors employing the much maligned “loan-to-own” strategy, either. Major financial institutions such as Wachovia and Credit Suisse — not to mention the United States Treasury — have recently employed credit bids to acquire assets out of bankruptcy.

While some of this activity (see, e.g., General Motors Corp.) is...
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