{"id":37640,"date":"2013-08-26T12:09:44","date_gmt":"2013-08-26T16:09:44","guid":{"rendered":"http:\/\/www.hedgeco.net\/news\/?p=37640"},"modified":"2013-08-26T12:24:02","modified_gmt":"2013-08-26T16:24:02","slug":"vulture-hedge-funds-getting-ready-to-swoop-down-on-detroit","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/08\/2013\/vulture-hedge-funds-getting-ready-to-swoop-down-on-detroit.html","title":{"rendered":"“Vulture” Hedge Funds Getting Ready to Swoop On Detroit"},"content":{"rendered":"

\"28_vulture_lgl3\"<\/a>New York (HedgeCo.Net) – Some major hedge funds are focusing on Detroit, looking for ways to profit from the\u00a0city\u2019s distressed debt, according to an article from the Detroit Free press.<\/p>\n

Vulture fund\u00a0is a term commonly used to refer to a\u00a0private equity\u00a0or\u00a0hedge fund\u00a0that invests in\u00a0debt\u00a0considered to be very weak or in imminent\u00a0default. Investors in the fund profit by buying this debt at a discounted price on a secondary market and then suing the debtor for a larger amount than the purchasing price. Debtors can include companies, countries or individuals. The term is used to criticize the fund for strategically profiting off of debtors that are in financial distress.<\/p>\n

“With $8.6 billion in long-term debt, Detroit would be comparable to the biggest corporate failures if it eventually files for bankruptcy, a major advantage for big hedge funds that are used to investing hundreds of millions of dollars at a time.” Reuters reports in an article called: Hedge funds in search of distress take a look at Detroit. “The sheer size of Detroit’s debt should make it easier for the funds to track down very large chunks of bonds, magnifying their profit potential, cutting their research and advisory costs and giving them leverage when it comes to restructuring talks.”<\/p>\n

The\u00a0city of Detroit\u00a0filed for\u00a0Chapter 9 bankruptcy\u00a0on July 18, 2013. It is the largest municipal bankruptcy filing in U.S. history by debt, estimated to be $18\u201320 billion, exceeding\u00a0Jefferson County, Alabama’s\u00a0$4\u00a0billion filing in 2011.[1]<\/sup>\u00a0Detroit\u00a0is also the largest city by population in the U.S. history to file for\u00a0Chapter 9 bankruptcy, more than twice as large as\u00a0Stockton, California, which\u00a0filed in 2012. Detroit\u2019s population has\u00a0declined\u00a0from a peak of 1.8 million in 1950; recently, the\u00a0New York Times<\/i>\u00a0called the city \u201chome to 700,000 people, as well as to tens of thousands of abandoned buildings, vacant lots and unlit streets.\u201d
\n<\/sup><\/p>\n

Detroit\u2019s bankruptcy filing followed a declaration of financial emergency in March 2013 that resulted in\u00a0Kevyn Orr\u00a0being appointed emergency manager. Orr\u2019s subsequent negotiations sought to get creditors to willingly \u201ctake a haircut\u201d on Detroit\u2019s debt, and were ultimately unsuccessful. (source Wikipedia)<\/sup>
\n<\/sup><\/p>\n

On July 19, 2013, Judge\u00a0Rosemarie Aquilina\u00a0of the Thirtieth Judicial Circuit Court of Michigan ruled the bankruptcy filing by Detroit violated Article IX, Section 24, of the\u00a0Michigan Constitution\u00a0and ordered Governor\u00a0Rick Snyder\u00a0to withdraw the filing immediately.\u00a0On July 23, an appeals court\u00a0stayed the circuit court ruling\u00a0pending future rulings on Michigan Attorney General\u00a0Bill Schuette’s appeal.\u00a0On July 24, the Bankruptcy Court added its own, federal stay of the state court proceedings.\u00a0On August 2, the bankruptcy court set a hearing date of October 23, 2013, for trial on any objections to the city’s eligibility for Chapter 9 bankruptcy, and March 1, 2014, as the deadline for the city to file a bankruptcy plan.<\/p>\n

Alex Akesson
\nEditor for\u00a0HedgeCo.net<\/a>
\nalex@hedgeco.net<\/a>
\nHedgeCo.Net<\/a>\u00a0is a premier\u00a0hedge fund database<\/a>\u00a0and community for qualified and accredited investors only. Membership in\u00a0HedgeCo.net<\/a>\u00a0is FREE and EASY. We also offer FREE LISTINGS for\u00a0Hedge Funds<\/a>!<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

New York (HedgeCo.Net) – Some major hedge funds are focusing on Detroit, looking for ways to profit from the\u00a0city\u2019s distressed debt, according to an article from the Detroit Free press. Vulture fund\u00a0is a term commonly used to refer to a\u00a0private […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,3],"tags":[],"class_list":["post-37640","post","type-post","status-publish","format-standard","hentry","category-activist-funds","category-hedgeco-news"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/37640","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=37640"}],"version-history":[{"count":6,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/37640\/revisions"}],"predecessor-version":[{"id":37642,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/37640\/revisions\/37642"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=37640"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=37640"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=37640"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}