This chapter explores the intricate dynamics of the private credit market and its effects on bankruptcies, with a focus on how private lenders may prioritize their investments over timely filings for struggling firms. Using Red Lobster as a case study, it contrasts the aggressive tactics of private credit lenders like Fortress Investment Group with traditional lending practices, questioning the overall benefits of private credit for distressed businesses.
There's been a lot of talk about private credit in recent years. The market has exploded in size, and there are worries that it could be a bubble that eventually bursts and sparks disaster. But there are other negative effects from private credit that might already be happening. In a new paper called "The Credit Markets Go Dark," co-authors Harvard Law School professor Jared Ellias and Duke University School of Law professor Elisabeth de Fontenay argue that the $1.5 trillion market for private credit is already having a big impact on the economy — and not in a good way. They say that the rise of private credit marks a seismic change for corporate governance and dynamism.
Read More:
Odd Lots Newsletter: The Black Hole of Private Credit
Private Credit Pushes Deeper Into Risk That Wall Street Is Fleeing
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