As Defaults Rise, Distressed-Debt Investors Seek an Edge by Buying the DIP

David Karp, Co-Head of Special Situations & Alternative Investments, examines how rising corporate defaults are creating opportunities for distressed-debt investors, who are increasingly competing to provide financing to struggling companies during bankruptcy. Firms are deploying strategies such as debtor-in-possession (DIP) financing to gain influence in restructurings and position themselves to take control of assets at discounted valuations. As competition intensifies, investors are taking on greater risk and offering more aggressive terms in an effort to secure deals and capitalize on market dislocation.

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