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So, Is the High Yield Market Efficient?

posted by Stephen Lubben

My inbox is being bombarded with law firm commentary on the Court of Appeals for the Second Circuit's decision that cramdown interest rates should be determined by "market rates," rather than by formula, when the relevant debt market is efficient. A good summary of the commentary can be found over at the Harvard Bankruptcy Roundtable.

And then we have a Bloomberg story this morning, filled with hand wringing about what might happen if a particular mutual fund were to sell a particular bond position – where the fund owns less than 20% of the issue. Nevertheless, the suggestion is that such a sale could have big, market moving effects. That does not sound like a very efficient market.

Given that the high yield market is apt to be the most relevant market to a chapter 11 case, what precisely, then, has the Court of Appeals achieved?

October 31, 2017 at 2:06 PM in Corporate Bankruptcy

Comments

Are you suggesting that Judge Drain ought to find that there is not an efficient market and return to the Till formula?

Posted by: Matthew Bruckner | October 31, 2017 at 09:09 PM

The comments to this entry are closed.

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