Client Alerts
June 11, 2019

Net Short Lender Disenfranchisement: Is the New Anti-CDS Vaccine Safe and Effective?

Sirius Responds to “Net Short Debt Activism” after Windstream

Windstream Holdings, Inc.’s (“Windstream”) chapter 11 bankruptcy filing following its contentious litigation with Aurelius Capital Management LP (“Aurelius”) has rekindled market participants’ concerns over the effects of so-called “net short debt activism” – the efforts of creditors who, despite holding a borrower’s debt, seem motivated to push the borrower into distress over covenant or other defaults. Bloomberg’s Matt Levine succinctly summarized these concerns in a recent column, writing that net short debt activism is “the idea that someone who is betting against a company will acquire some of its debt and use that position to call defaults, make trouble, and generally try to drive an otherwise healthy company into bankruptcy over a minor technical default. It seems bad.”

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