Trading in the Distressed Debt Market Argumentative Essay by davyd

Trading in the Distressed Debt Market
An argument towards preventing an owner of a debt from declaring himself trustee of the debt for the benefit of another.
# 145520 | 946 words | 9 sources | APA | 2010 | GB
Published on Nov 14, 2010 in Accounting (General)


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Description:

The paper discusses whether or not the owner of debt should be prevented from declaring himself a trustee of the debt for anther. The paper argues that under certain circumstances there are good reasons for preventing an owner of a debt from declaring himself trustee of the debt for the benefit of another and that these considerations must be balanced against the interests of creditors and commercial lenders upon the insolvency of borrowers. The author also concludes that when a borrower becomes insolvent, a lender ought to be entitled to take any steps necessary to mitigate losses and equitable assignment is one way to achieve this end.

From the Paper:

"At the same time, it must be remembered that the reason that a debt is 'distressed' is because the risk of default is exceptionally high, usually because the borrower has become insolvent or is on the brink of insolvency . At this point, it might be argued that the law should be less concerned with protecting the legitimate expectations of borrowers and more concerned with providing creditors with a way to be able to recover some of its losses. The assignment of the equitable interest in a debt is one such mechanism, as it permits lenders to divest an interest in their debts to third party institutions in return for valuable consideration, while retaining legal title in the debt and any liability to obligations arising from the original contract. This reasoning was employed by Lord Justice Hobhouse in the case of Camdex International Ltd. v Bank of Zambia to support the Courts decision to uphold the validity of a trust constituted over a distressed debt:"

Sample of Sources Used:

  • Moyer, S., G., (2004), "Distressed debt analysis: strategies for speculative investors", J Ross Publishing.
  • Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85.
  • Wood, P., R., (2007), "Project finance, securitisations, subordinated debt", Volume 5, 2nd Edition, Sweet and Maxwell Publishing.
  • Leahy, B., (2007), "Assigning Distressed Debt, Declarations of Trust and the Vanderpitte Procedure: Barbados Trust Company Limited v Bank of Zambia [2007] 1 Lloyd's Rep 495 (CA)", The Journal of International Corporate Rescue, Volume 4, Issue 6.
  • Barbados Trust Company Limited v Bank of Zambia [2007] 1 Lloyd's Rep 495.

Cite this Argumentative Essay:

APA Format

Trading in the Distressed Debt Market (2010, November 14) Retrieved June 07, 2023, from https://www.academon.com/argumentative-essay/trading-in-the-distressed-debt-market-145520/

MLA Format

"Trading in the Distressed Debt Market" 14 November 2010. Web. 07 June. 2023. <https://www.academon.com/argumentative-essay/trading-in-the-distressed-debt-market-145520/>

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