Creditors could disclose hostile credit-default swap positions
By Hicbd
Thu Sep 8 2022 1:26 pm
"First, the Securities and Exchange Commission should immediately require greater disclosure of credit-default swap positions held by creditors. It’s the only way for a company, its investors and its employees to have a transparent understanding of a creditor’s motivations...Once those positions are disclosed, the S.E.C. should help companies protect themselves from hostile creditors. The agency could, for example, allow companies to revise the terms of their bond agreements so that creditors with credit-default swaps don’t have the same voting rights as creditors who want a company to succeed. The definition of “failure to pay” and other conditions that might set off a default could also be revised to make it harder for a hedge fund to push a company into technical default. Judges can also play an important role, by taking the creditors’ motivations into account as more of these cases inevitably wind up in the courts."
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