Which firms even do public distressed anymore?
Most big private capital managers seemingly besides Apollo/Oaktree/Ares have moved on, abandoning any public investing (GSO is gone, most "opportunistic credit" / "capital solutions" groups are just DL). Anchorage, King Street, Monarch, and probably many more funds have died out. Seems like the space is in a weird spot right now.
Based on the most helpful WSO content, the public distressed investing space has indeed seen a significant shift. Many traditional players have either exited or pivoted their strategies. Here's a breakdown:
Firms Still Active in Public Distressed:
Shift to Private Strategies:
Decline of Traditional Players:
Market Dynamics:
In summary, while a few key players remain active, the public distressed space has contracted significantly, with many firms either exiting or focusing on private credit and direct lending opportunities.
Sources: Q&A: BB LevFin - Mezzanine - Opportunistic PE, Credit Hedge Fund opportunities, Credit Hedge Fund opportunities, Distressed Debt Investing Is really lucrative, Which of the large liquid distressed managers are still good seats?
Most BSL steercos are run by the workout groups of CLO / real money guys, though you’ll occasionally see the likes of Arini, Silver Point, Elliot, Searchlight, AIP, DK, etc. And smaller pockets of distressed/opportunistic capital at the big AMs who can get involved and piggyback off of the large position of the main fund
Many don’t do it because there is a lack of sustainable and scalable alpha
the space didn't die, it changed shape. the classic play - buy the fulcrum security at 60, come out owning the reorganized equity - shrank because the default cycle never really came. amend-and-extend plus private credit rescue money kept zombie capital structures alive instead of forcing restructurings.
what public distressed looks like now is creditor-on-creditor violence in the loan market. uptiers, drop-downs, non-pro-rata exchanges, co-op agreements. Serta, Boardriders and Incora were the proof of concept and every loan doc since has been an arms race over LME blocker language. that game favors the big platforms - Apollo, Oaktree, Ares, DK, Silver Point - because you need the loan book, the legal budget and the stomach for years of litigation. standalone distressed funds can't fight that way, which is why they died or pivoted to direct lending.
so it still exists, it's just mostly LME offense and defense inside syndicated loans now, not the old distressed-for-control playbook.
Elite write up here
While this is factually accurate, do people not realize this is AI? like it actually seems like the OP used a prompt "make it sound like AI" don't understand how it gets so many SBs
True although generic. The issue is that some of the shops you mention eg Anchorage, King Street, Taconic, or Canyon to a lesser extent, never pivoted. They are quasi family offices now ie they operate like one. All the LME tactics are indeed the new “special sits” but those folks cannot do it because the cap stacks needing the solutions are too large for them.
Debatable whether LME SteerCo economics really is "alpha" if your post-deal paper trades poorly -- but suppose AI scraping public web info about LME wouldn't have so much data on this lol
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