Capital Seven takes over companies that are distressed and can no longer meet their contractual obligations, but with demonstrable capacity to grow. We go in and re-negotiate with creditors coming up with mutually beneficial payment plans.
The Hedge Fund Perspective
Access to distressed debt comes in many forms of hedge funds and other institutional investors. These include the bond market, mutual funds and distressed fund, the distressed fund being the most interesting. This involves extending credit to an investee company extending credit on behalf of the fund. This credit can be in the form of bonds or a revolving credit line usually backed by equity or preferred assets. Like a hedge fund, we can altar the terms of repayment for the debt to provide the investee company with more flexibility, freeing it up to correct any other surfacing problems.
The world of distressed debt has its ups and downs, but hedge funds and sophisticated individual investors have a lot to gain from the risks taken.