The credit default swap (“CDS”) has never been tested in bankruptcy proceedings on any significant scale, particularly under recent amendments to the Bankruptcy Code. In part, this is because the CDS market is a very recent phenomenon. CDS market participants also make considerable efforts to avoid holding a credit default swap where the counterparty has gone into bankruptcy.
USA, Derivatives, Insolvency & Restructuring, Caplin & Drysdale, Chartered, Bankruptcy, Credit (finance), Collateral (finance), Swap (finance), Hedge funds, Credit risk, Asset-backed security, Bailout, Default (finance), Collateralized debt obligation, Lehman Brothers cases, Credit default swap, UBS, International Swaps and Derivatives Association, Lehman Brothers, Bear Stearns, Title 11 of the US Code, US District Court for the Southern District of New York