Bankrupt and Distressed (BAD) Research and Due Diligence

[Madclown]

I saw the DDI write-up and considered the potential for an equity recovery for VSTNQ. The inescapable reality of the situation is that equity must bring enough cash to the table to make up the equity deficiency and satisfy all of the creditors. This amount will be well in excess of the $1.25 BILLION that the Bondholders will have to commit because for equity to recover they would have to make the general unsecureds whole. The best plan on the table right now calls for a 50% haircut for the general unsecureds.

Time is of the essence for equity because there are 2 plans on the table that zero them out. Whether right or wrong, makes no difference. The path of least resistance is cancellation of VSTNQ equity interests because they have no voice. I acknowledge that they are trying to get a voice and we shall see how that turns out come Wednesday. If the EC motion is denied then the time value built in to the current equity price will evaporate. Smart money with eyes and ears in the courtroom will recognize this and head for the exits, post haste. Those who have been through this process, know this all too well.

To my knowledge, no equity constituency has ever had a meaningful recovery without an equity committee. If VSTNQ gets one on Wednesday, they have a fighting chance and I would not want to be caught in a short position. If not, then all of the table pounding and handwringing becomes noise. Cash is king in a reorg situation, those bringing it to the table will enjoy the spoils, no matter who they belong to.