The Distressed Debt Report - September 21, 2006

Returns, Safety Attract New Money to Receivables Finance

Hedge funds and specialty lenders are looking at a new place to park their secured loan allocations as they seek out higher returns and lower risk – the factoring industry. Full Story

Case is Significant for Trade Vendors with Second Liens

Recent developments in the Tower Records and Musicland Group bankruptcy cases appear ominous for trade vendors holding secured second lien positions on their customers’ debt. Trade vendors in troubled industries have increasingly demanded second liens on customers’ assets in recent years. With the advent of the second lien debt market, many had seen a second lien on inventory as a means of improving their position should the customer file for bankruptcy. Full Story

Big Four Accounting Firm Restarts Restructuring Practice

In the latest sign of pessimism about borrowers’ health (or optimism, depending where you stand) the Big Four accounting firm PricewaterhouseCoopers is re-entering the business of advising U.S. companies on debt restructuring. Full Story

• Managements Win Legal Cover From 'Deepening Insolvency'
• Enron Syndicated Debt Holders Appealing Bankruptcy Ruling
• Investors Withdrawing from Palisades
• Again, Reports Emerge of Fortress IPO Plans
• Kasdan Launches Real Estate Firm
• Jewelry Chain, Owing $15.2M to BofA, Goes to Auction

A unit of Energy XXI Ltd. borrowed $325 million in second lien debt, in one of the biggest recent financings by a middle market company. Business development company NGP Capital Resources said it invested $14 million in the deal. Full Story