CreditSlips

Bankruptcy Valuations: A Pair of Modest Proposals

01/29/15

I want to take up Michelle Harner's call for "innovation and new approaches to valuation". Valuation may well be the most important issue in bankruptcy, and it is also the issue that is least subject to meaningful judicial review. Imagine a Court of Appeals trying to parse through discounted cash flow models or what are proper comparables.

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To Hedge or Not to Hedge

01/29/15

Much is being made of American Airlines' "bold" decision to avoid hedging its fuel costs.

I fully believe that corporations engage in way too much hedging, mostly to the benefit of big financial institutions. But let's be clear, a just out of bankruptcy counterparty is not going to be doing a lot of swaps deals anyway.

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Second-Liens and the Leverage Option

01/28/15

Susan Wachter and I have a new (short!) paper up on SSRN. It's called Second-Liens and the Leverage Option, and is about the curious absence of negative pledge clauses in US home mortgages, which enabled enormous amounts of second-lien leverage (much more than anyone realized) during the housing bubble.

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Why? Why?

01/26/15

I'm totally with this guy – Hershey's move to keep British Cadbury's products out of the US is un-American. Anyone who has tasted the British version of Cadbury's knows that it's a far superior product.

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Shockingly, They Are Hypocrites – Just Like Everyone Else

01/23/15

As Germany vs. Greece, and Germany vs. the EU Southern and Western edges, heats up yet again, some important historical context, over at Spiegel.

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