Distress Investing: Principles and Technique
by Martin J. Whitman, Fernando Diz. Reviewed by distresseddebt.com
Distress Investing by Martin Whitman and Fernando Diz is one of the most popular publications in the space of Distressed Debt investing. Similar to other books on the subject, the key focus of the book is the “US Chapter 11” bankruptcy code. The book is divided into four parts: 1) an overview of distressed debt, 2) Chapter 11 and voluntary exchanges, 3) analysis and risks and 4) Two case studies. Most issues are touched upon from a high level “chairman’s” point of view, which makes the book an easy read and not a long one (under 250 pages) – this is a huge plus.
I would primarily recommend this book to finance professionals looking to learn more about distressed debt investing. Overall, the book offers many good insights into the restructuring processes faced by companies in default. My favourite part of Distress Investing is the great summary of the Chapter 11 process and examples of its “real life” applications.
This is, however, not a manual on how to be successful in distressed debt, nor is it training material for distressed debt analysts. The chapter “The Five Basic Truths of Distress Investing” is perhaps the area where I was most let down by the book, mainly due to my expectations of some details on how to “get it right” as opposed to merely a description of “how it works” in distress investing.
My main criticism is that the authors seem to repeat throughout the book that advisory fees are a huge issue in distressed debt. This gives one a sense of a personal vendetta rather than an objective guide to distressed debt. Perhaps they are simply trying to say that lawyers and financial advisors are the ones who make all the money in distressed debt .
Despite the above limitations, the book is a good read which brings you closer to the world of distressed debt for those not privy to it. This book may not be a “need to have” but is definitively a “nice to have”.