Trading in Distressed Debt

Richard G. Mason, Steven A. Cohen, Ian Boczko, Sarah A. Lewis, and David Gruenstein of Wachtell, Lipton, Rosen & Katz, have prepared a memorandum concerning the possession and use of information when buying and selling distressed debt (an abridged version of which was published in The New York Law Journal): Trading in Distressed Debtpdf_logo .

  • Although bonds are generally considered securities, interests in bank debt are typically not considered securities. (see Banco Espanol de Credito v. Security Pacific National Bank, 973 F.2d 51, 55–56 (2d Cir. 1992). There is not universal agreement on this position.
  • Knowledge of bank debt can lead to insider trading in other securities.

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