Replies to post #9530 on Corus Bankshares Inc. (fka CORSQ)

[Billiam_2]

New senario based on current events:
Say the New Plan Sponsor is buying debt at the 5% recovery margin. Money now instead of later for CDO owners. Say he has been successful in obtaining 60% of the debt for $12MM. Now he goes to Mr. Big and trades the debt for equity along with CDO holdouts for say $1.00/s, $40MM. The remaining shares are held by Mr. Big and us. All debt is extinguished and the Plan Sponsor has controlling interest in CORUS to include the remaining monies, $25MM. Total cost to the Plan Sponsor $37MM. He carefully distributes CORUS shares to the existing shareholders in his company so as not to violate rule 382. No large shareholders. He can now use the BHC to buy cheap assets, gain any monies from the FDIC and use the NOLS, $650MM. As monies come in equity goes up.

This senario uses all recent terms:
1. Trading of Trust Preffered
2. Selling of Trust Preferred
3. Equity financing
4. Use and valuation of NOLS
5. Reviewing of previous POR's
6. New Plan Sponsor
7. New POR

It also answers the question of how the the Plan Sponsor would get equity control of the New Corus Bank.
First step, buy debt and appear to be continuing the POL. Buy as many cheap shares as you can.
BRILLIANT!!!

[Bluzie2]

People trade debt all the time. As I understand it, it's often possible to make a good penny simply buying the debt of a bankrupt company and waiting for the creditors to get paid. This is because institutional and other holders often just write off the debt, and thus they're willing to sell it cheaply. They're often big institutional entities, and they don't take the time to fully understand the bankruptcy process.

Turning to your question - I'm pretty sure that a party that bought 1/2 the debt probably could not utilize the NOLs, because at least 1/2 of the ownership of the reorganized company would have to be people who owned or held debt in the company in the 2 year period pre-bankruptcy.