Overall, does claims trading help or hinder the chapter 11 process? Should additional disclosures be required?
Claims trading became a big business in the early 1980s. At that time, it mainly involved buying trade creditors claims in order to make a profit under the plan of reorganization. Since then, claims trading has grown exponentially and now involves all types of debt. Often, claims are purchased for the purpose of taking control of the insolvency process and owning the reorganized debtor.
A lot has been written on the benefits of claims trading. In particular, supporters note that claims trading provides liquidity to creditors who may not want to be involved in the bankruptcy process. This is true and…
Read the full article at: http://blogs.wsj.com/bankruptcy/2016/02/23/the-examiners-courts-have-the-tools-to-keep-claims-trading-in-check/