Parties Buying Discounted Claims Should Have Equal Chance to Recover as Original Claimants According to Latest ABI Quick Poll
Contact: John Hartgen
PARTIES BUYING DISCOUNTED CLAIMS SHOULD HAVE EQUAL CHANCE TO RECOVER AS ORIGINAL CLAIMANTS, ACCORDING TO LATEST ABI QUICK POLL
May 24, 2011, Alexandria, Va.— An overwhelming majority of respondents (74 percent) in a recent ABI Quick Poll believe that a party who bought claims for pennies on the dollar should have the same chance at potential recoveries in bankruptcy as the original claimants. Sixty-three percent “strongly disagreed” and 11 percent “disagreed somewhat” that a party who bought claims for pennies on the dollar should receive less in bankruptcy than the original claimants would have gotten.
Though it is a speculative activity, parties purchasing bankruptcy claims have the potential to recover more than their initial investment as a company is wound down. Creditors also have the ability to cash out their claims quickly at a set price. Purchasing and trading bankruptcy claims in large corporate bankruptcies continues to grow. For example, SecondMarket Holdings Inc. reported that bankruptcy claims against Lehman Brothers Holdings Inc. saw 380 claims traded in April for a combined face value of $1.8 billion. Nearly $42 billion of Lehman claims have traded since the firm filed for chapter 11 protection, according to SecondMarket.
Twenty-one percent of respondents thought that a party who bought claims for pennies on the dollar should receive less in bankruptcy than the original claimants would have gotten. Two percent did not know or had no opinion on the poll question.
ABI’s Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://www.abiworld.net/quickpoll/ to access the results of previous ABI Quick Polls.
ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes over 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.