The industry term is “distressed debt/special situations” funds. They come in after a firm has been wrecked with too much leverage and they pay pennies on the dollar for the fulcrum security, which is usually some kind of debt that converts to equity.
The firms that wreck the companies in the first place are plain vanilla leveraged buyout shops. This specific tactic done overtly was big in the 80s. Now they’re more covert about it but the end result is the same.
The industry term is “distressed debt/special situations” funds. They come in after a firm has been wrecked with too much leverage and they pay pennies on the dollar for the fulcrum security, which is usually some kind of debt that converts to equity.
The firms that wreck the companies in the first place are plain vanilla leveraged buyout shops. This specific tactic done overtly was big in the 80s. Now they’re more covert about it but the end result is the same.