North American Distressed Debt: Market Outlook 200710 January 2007

Welcome to the North American Distressed Debt Outlook 2007, which Debtwire is delighted to present in conjunction with Bingham McCutchen LLP and Chanin Capital Partners.

In this report, you will find an extensive survey of expectations for the year to come from the top hedge fund managers, proprietary trading desks and other asset managers in the industry.

Executive Summary

Large corporate bankruptcies qualified as an endangered species in 2006 but distressed investors still found superior returns relative to most competing strategies. They accomplished that by focusing on sectors with residual restructurings from earlier in the decade – energy, cable/telecom and airlines – as well as the crisis-stricken auto sector.

Judging by the responses reported in this survey, the year to come will present a significantly different investment climate and a host of new opportunities.

It’s the economy, stupid. Federal Reserve Chairman Ben Bernanke and the Greek chorus that is Wall Street continue to predict a soft landing for the housing market and steady, if slower, economic growth. Ask 106 of the top hedge fund managers, proprietary trading desks and other asset managers in the distressed market for their forecasts and they tell a very different story.

Less than one-quarter of that group see a soft landing for housing in 2007, almost one-third see a hard landing and about half expect something in between. More participants in our study – a full two-thirds – picked the construction sector to present an increase in distressed opportunities than any other industry in 2007...

Table of Contents

Research Methodology

Foreword

Survey Findings

About Bingham McCutchen LLP

Case Study: Pliant Corporation

About Chanin Capital Partners

Case Study: Legacy Estate Group

Contacts

We hope that this report useful, and would particularly welcome any feedback or questions you might have.

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