Fulltext Search

Former shareholders in leveraged buyouts may be sued by the estate representative or by creditors to recover funds paid to them for their shares as fraudulent transfers under federal or state law if the debtor subsequently files for bankruptcy.

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.