HPS’s Puri Says Distressed Debt Swaps Are Mostly Costly Failures

Troubled companies are failing to stay afloat by forcing losses on investors through debt swaps, proving such deals don’t work, according to HPS Investment Partners.

“There’s a lot of money and fees going out the door and there’s a lot of brain damage and creditors and recovery rates have been totally demolished and it didn’t work anyway,” Purnima Puri, head of liquid credit and a governing partner at HPS, said on the Bloomberg Intelligence Credit Edge podcast Thursday.

Purnima Puri at HPS Investment Partners.

Photographer: Michael Nagle/Bloomberg

While so-called liability management exercises, or LMEs, allow companies to skirt a larger restructuring that comes with a bankruptcy ...