Trade Claims

A small but growing market has developed for buying and selling debt claims against debtors seeking relief under Chapter 11 Bankruptcy Filing. Chapter 11 protection gives the debt holders consolation that the company will continue to do business although they will be unable to claim missed interest payments. This market provides the debt holder an alternative to forced participation in the reorganization, reduces the costs of bankruptcy and provides an immediate cash payment.

When a debtor files bankruptcy, holders of the debtor's trade claims sometimes look for buyers to purchase this debt. This growing practice has created an informal and unregulated market. The number of debtors with trade claims trading in such markets has grown rapidly in recent years as Chapter 11 filings have increased and interest among distressed debt buyers has increased.

Very attractive returns are possible in this market. For example, the unsecured creditors of Interstate Bakeries, known for Wonder Bread and Hostess, took offers for up to 90% of their claims. Investors in trade claims may seek to gain control of the reorganized debtor by changing the debt into equity sufficient to control the company. With control established, new equity holders may change the terms of the Chapter 11 plan to the investor’s advantage. Trade claims involve unsecured debt and substantial capital risk. All terms of payment, repayment, interest charges and violations should be carefully examined. Your APS Financial Representative can refer you to our affiliate, APS Capital.  APS Capital specializes in the trading and analysis of Bank Debt and Trade Claims, which are non-regulated, non-securities, transactions. This affiliate is not a member of FINRA, SIPC, the SEC or any other regulatory body.

We will be happy to refer you to the APS Capital trade desk for credit opportunities,  pricing, and any further information.

• Trade Claim Buyers
• Trade Claim Sellers