The Kmart bankruptcy is instructive.
Equity was cancelled and therefore, no Escrow Tracking Markers were issued. Eddie Lampert bought the debt while Kmart was in bankruptcy and analysts had discovered that Kmart held a substantial portfolio of real estate and leases at below market prices.
Debt acquired the company, just like the hedge funds tried to do in this case, but failed to cancel equity.
In bankruptcy, equity owns the company, but is the last to get paid.
In the present case, equity survived.
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