CARL MARKS ADVISORY GROUP PARTNER WARREN H. FEDER'S RECENT ARTICLE IN THE ABF JOURNAL, "DESPITE A BLEAK CLIMATE—THERE ARE OPPORTUNITIES IN A DISTRESSED ECONOMY," POINTS OUT THE VARIOUS OPPORTUNITIES THAT EXIST FOR INVESTORS IN TODAY'S TROUBLED MARKET. FEDER STATES THAT DESPITE THE CHALLENGING FINANCIAL ENVIRONMENT, WITH DUE DILIGENCE, THE RIGHT OUTLOOK AND READY CASH, SUCCESSFUL INVESTING CAN INDEED BE A REALITY.

THE ARTICLE TAKES A LOOK AT THE LENDING LANDSCAPE, COMPANIES THAT ARE STILL CLOSING DEALS, EFFECTS OF NEW AMENDMENTS TO THE BANKRUPTCY CODE AND THE POSSIBLE PITFALLS TO AVOID WHEN INVESTING IN THE CURRENT MARKETPLACE.

Despite a Bleak Climate—
There are Opportunities in a Distressed Economy
By Warren H. Feder

As those in the "deal business" are so painfully aware, credit is tighter than at almost any time in recent memory. For the larger transactions, liquidity has pretty much left the market and banking balance sheets are bloated with loans that cannot be sold. The secondary market has largely disappeared. Increasingly more banks are closing their doors to new loans.

Despite the bleak economic climate, opportunities do exist for distressed investors. Investors with dry powder (cash reserves) will be able to scoop up assets at exceptionally discounted prices. There also will be opportunities to jump in earlier out of court (prior to a bankruptcy filing) and higher into the capital structure. New structures, such as equity invested as secured convertible debt, also will emerge.

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	Warren H. Feder Partner Carl Marks Advisory Group
	"The bottom line is simple: The remaining banks and lending funds are lending less and charging more under tighter operating and financial covenants. As a result, it's now more difficult to get waivers for technical defaults on loans or to get a loan at all." — Warren H. Feder

Article reprinted by permission
from ABF Journal
Seventh Annual Conference Issue
October 2008 | Vol. 6, No. 9