prospects for bnbg's, page-2

I have been in the situation of holding subordinated debt in a collapsing company three times. Twice it worked out and once it failed (though not completely).

The time it worked out, the situation was saved by:

- once, the company's management took the lead. The company was refinanced from the debt holders all all company stakeholders (except the ordinary equity holders) came out with a good deal. The management realised that the social costs of wind up - were too great - effort to salvage the situation was driven by "community spirit" essentially.

- the second instance was the recognition by the company advisors that an external equity arrangement could save the situation. The advisors, themselves, were counted in the contributors of new equity. Again, wider company stakeholders were saved but the driving force was recognition of basic value and supporting this with an appropriate equity structure.

- the third situation was where the company value was impaired by, basically, fraud (or at least profound stupidity). There was not leadership, from any sector - management seemed only intent on lining their liferaft with champagne and caviar. Wider stakeholders all suffered.

The first situation was gentlemanly - those doing the reorganisation fairly valued all stakeholders. The second was more brutal - the first deal was rejected by noteholders - a subsequent deal was approved. The last situation was generally miserable - the criminality of the situation killed any chance of a recovery.