Distressed investing internship interview

you should be able to find a lot of threads if you dig a bit deeper and just google stuff. You should be familiar with the different types of debt tranches like Type A,B,C, mezzanine, subordinated etc.

in summary, distressed debt investing usually requires a great understanding of capital structure (like a lawyer, you must go through a lot of documents to fully understands who gets what in the event of distress, how collateral is allocated to different entities and so on) and valuation is not much different (comparables, DCF etc.) but you just think about being repaid. You don't have equity so your upside is pretty limited and you are focused on protecting the downside. Junior lenders care the most about valuation because a higher or lower valuation could be the difference between making a profit or being fully wiped out. Senior lenders will often support the higher valuation just because of reputation/relationships. This happens because they are often fully secured through collateral. 

Relationships are very important in this business and it is pretty deal-driven and connected to understanding restructuring and the law. 

This is where it gets interesting. European mid-market is arguably the best place for distressed debt because it's so complicated and with complexity comes opportunity. France/Germany/Italy have different laws and under each jurisdiction, your rights are different and the process changes. In certain countries you want a higher return to compensate for the risk (e.g. France). You can ask questions about this. 

The UK is kinda chill for distressed debt because the legal system functions well and the US is top-tier. If a US court decides something, other jurisdictions often follow it. American firms entered the EU market exactly because it's more complicated. EU/UK don't have functioning Chapter 11 type of law. 

Event-driven investing is different. It doesn't have to be distressed, they just identify some catalyst. I know less about this. 

You can ask plenty of general questions about sector/geographical exposure, sourcing and so on. But the key thing is to just understand what they do and how they make money. I know this is far from exhaustive but I hope it points you in the right direction. Good luck! 

EDIT: what i described is more about active distressed debt investing btw. Active means the fund buys a relatively large position and actively engages with all stakeholders to get it sorted. Usually involves a restructuring. Passive is typically just hedge funds doing the analysis and just buying a relatively small position in the security and just holding until they sort things out.