Hedge Funds Gain Traction in Challenging Bombardier Bond Deal

Bombardier Inc.’s strategy of selling new bonds to a Canadian investor to fend off a group of hedge funds has run into a skeptical judge in a New York courtroom.

The Montreal-based aerospace manufacturer, facing financial pressure, sold off major assets including its rail business, regional jet program and aerostructures division in 2020 and 2021. A group of holders of its 7.45% bonds due in 2034 argued that the deals violated the terms of the debt.

So the company sold an additional $260 million of the bonds to Richmond Hill, Ontario-based Canso Investment Counsel Ltd. That gave Canso a ...