Matt Levine’s Money Stuff: Distressed Debt Deal Makes People Mad

Programming note: Money Stuff will be off tomorrow, back on Monday. Unless Elon Musk does something weird I guess.

Incora

Here’s a schematic description of how modern distressed-debt investing works :

1. A company borrows $1 billion, in a syndicated loan or a bond issue, from a bunch of different investors.

• 2. As is customary, the loan agreement or bond indenture says “this agreement may be amended by a majority of the investors.”

• 3. Time passes and the company runs into some trouble.

• 4. The company goes out to 51% of the investors — holders of $510 million of the bond or ...