Financial Distress & Control - A distressed-debt fund is taking control of one of the largest malls in America [1] - The move wiped out some creditors [1] - Holders of bonds once rated AAA are facing steep losses [1] Industry Impact - The situation highlights potential risks in the commercial real estate sector [1] - Distressed-debt funds are actively seeking opportunities in struggling assets [1]

Company Status - Distressed chemicals firm Kem One's bonds investors are seeking cooperation agreement with other debtholders [1]

Core Viewpoint - Marathon Asset Management LP perceives First Brands Group as a valuable company despite its poor financial situation, having acquired its term loan at approximately 40 cents on the dollar [1][3]. Group 1: Investment Details - Marathon has taken a leading role in the First Brands steering committee and provided a $1.1 billion debtor-in-possession loan to the company [2]. - The firm holds $238 million in the first-lien term loan and $41 million in the second-lien loan, as indicated in court documents [2]. Group 2: Company Situation - First Brands has emerged as one of the most significant distressed cases this year, entering bankruptcy due to accounting issues raised by loan investors [3]. - A creditor has alleged that up to $2.3 billion has "simply vanished," potentially leading to substantial losses for long-term investors and lenders [3]. Group 3: Strategic Focus - Marathon's objective is to assist First Brands in exiting bankruptcy swiftly and establishing a proper accounting system [4]. - The firm has also invested in Marelli, another global auto-parts supplier that filed for bankruptcy this year [4]. - Marathon is avoiding subprime consumer loans due to increased scrutiny following Tricolor's bankruptcy, citing a "huge" loss rate in that sector [4].

Market & Economy - Tariffs lead to higher pricing, but the market has shown resilience [3] - The economy's performance dictates the impact of tariffs; a strong economy can withstand tariffs, while a struggling one requires lower rates or tariffs [4] - Current market valuations are considered expensive, making it difficult to find discounted assets [11] Distressed Debt & Lending - Opportunities in distressed debt are currently limited in the US, with more opportunities in Europe and Asia [5][6] - Lending rates in Europe and Asia can reach 12% to 15% for short-term capital [6] - Lending is often based on asset value rather than cash flow, catering to those who need short-term capital [7][8] - Lowering of rates by the Federal Reserve would lead to charging less, around 500 to 700 basis points over SOFR [9] - A significant rate decrease (1% or 2%) would indicate substantial economic problems [10] Private Equity & Alternative Investments - There are concerns regarding the democratization of private equity into 401k plans due to the illiquid nature of these investments and the liquidity needs of retail investors [14][16] - Small investors may face challenges with illiquid private equity investments, potentially needing to sell at a discount if they require capital [19]

Investment Opportunity - Private equity firms struggling to realize returns may offer opportunities for distressed debt investors [1] Industry Analysis - Glendon Capital co-founder Holly Kim highlights the potential for distressed debt investors [1]