"A Loan Trader's Guide to Reorganization Equity" by Thao Do, Scott Budlong and Julia Lu

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February 24, 2011

The trading rules and conventions of the loan market are well known to its participants. Similarly, the laws and practices governing equity securities trading are quite familiar to securities market professionals. The opportunity for confusion may arise, however, when these two markets quickly converge—for example, when the loans of a reorganized borrower are converted into or satisfied by the issuance of equity securities. In this memorandum, Richards Kibbe & Orbe LLP partners Thao Do, Scott C. Budlong and Julia Lu describe the key securities law and related issues that can arise before and after "reorganization equity" is traded, and identify the advisable documentation conventions applicable to those trades.

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