Insolvency Is History If Bad Debt Market Growth Endures; 22legalfinance

The Birmingham Post (England), September 7, 2007 | Go to article overview
Save to active project

Insolvency Is History If Bad Debt Market Growth Endures; 22legalfinance


The growth of the UK distressed debt market and resultant trend towards restructuring and debt trading could see the end of the traditional large corporate insolvency, according to advisors at accountants Mazars.

With institutional investors and hedge funds both increasing capital allocations for distressed debt investment, companies facing financial difficulties are more likely to secure a second or third restructuring where they would previously have struggled to secure new capital or refinance.

Steve Wood, partner and insolvency specialist at Mazars in Birmingham, said: "Trading in distressed debt occurs when a creditor decides that it is more valuable to their business to secure a reduced but quicker return on the loan than it would be to pursue a potentially bad debt over a longer period.

"In such cases, the original lender may look to repackage and sell on the debt to a third-party, specialist investor, such as a hedge fund or institutional investor, which is better placed to deliver longer term returns on such investments.

"The UK market in distressed debt was not really established until the start of the 21st century and tightening economic conditions, evolving EU banking legislation and competition from the long established US debt trading market have driven significant growth over recent years.

"For companies facing financial difficulties, this means that lenders that previously pushed for recovery action when repayments proved to be problematic may now consider selling on the debt to a new investor.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Insolvency Is History If Bad Debt Market Growth Endures; 22legalfinance
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?