Investing in Financially Distressed Firms: A Guide to Pre- and Post-Bankruptcy Opportunities (251) - Hardcover

Moeller, Susan; Ramaswami, Murali

Hardcover

ISBN 10: 0899304044 ISBN 13: 9780899304045

Publisher: Praeger, 1990

Synopsis

This comprehensive new study examines the impact of the 1978 Bankruptcy Reform Act on firms that file under Chapter 11 and on investors who own shares or bonds in financially distressed corporations. Demonstrating that high average returns often accompany wise investment choices concerning bankrupt firms, the authors explain how to spot potential investment targets, assess investment risk, and profit from investing in firms undergoing reorganization following a bankruptcy filing. Both individual and institutional investors looking for new investment opportunities and students of corporate finance and financial management will find important new insights into the investment potential of financially distressed firms. Investing in Financially Distressed Firms represents a good buy for those who would like to hunt bargains in the broken angel sector of the market. Journal of High Yield Bond Research

This comprehensive new study examines the impact of the 1978 Bankruptcy Reform Act on firms that file under Chapter 11 and on investors who own shares or bonds in financially distressed corporations. Demonstrating that high average returns often accompany wise investment choices concerning bankrupt firms, the authors explain how to spot potential investment targets, assess investment risk, and profit from investing in firms undergoing reorganization following a bankruptcy filing. The legal issues involved in investing in bankrupt firms, the environment within which the bankrupt firm operates, and the relationship between stock market efficiency and bankrupt firms also receive thorough coverage. Both individual and institutional investors looking for new investment opportunities and students of corporate finance and financial management will find here important new insights into the investment potential of financially distressed firms.

The volume begins with an introduction which sets the stage for the discussion that follows by describing the reasons for the increasing rates of corporate bankruptcy in the 1980s. The authors go on to explore the incentives for investing in bankrupt firms and offer pointers for investors considering such a move. In order to provide the reader with the tools necessary to evaluate potential investment opportunities, the authors also describe the reasons for corporate financial failure, the effects of reorganization on a firm, the differences between old and new bankruptcy laws, and the legal settlement of bankruptcy claims. An analytical model for predicting successful reorganization--and thus a potentially lucrative investment target--is described and illustrated as are models of stock market efficiency. The study concludes with four detailed case studies that illustrate the process of bankruptcy and the possible investment outcomes. The text is accompanied by numerous explanatory tables and figures.

About this title

Book Description:

Demonstrating that high average returns often accompany wise investment choices concerning bankrupt firms, the authors explain how to spot potential investment targets, assess investment risk, and profit from investing in firms undergoing reorganization following a bankruptcy filing.

About the Author:

MURALI RAMASWAMI is Senior Vice President and Director of Product Development at the Travelers Investment Management Company. He has published extensively in the areas of microeconomics of industrial organization, corporate bankruptcy, futures and options, and global finance and is a frequent speaker at industry and academic seminars.

SUSAN E. MOELLER is an Assistant Professor of Finance at the University of Michigan in Flint. She has published extensively in the areas of corporate bankruptcy and international finance.

About this edition

• Publisher: Praeger
• Publication date: 1990
• ISBN 10: 0899304044
• ISBN 13: 9780899304045
• Binding: Hardcover
• Number of pages: 183