The fight between the Lehman Brothers’ creditors continues. Two months ago John Paulson had to disclose that he paid as little as 9 cents on the dollar for Lehman’s debt. Now Paulson tries to turn the table and make dozens of banks and hedge funds disclose their transactions in Lehman’s bonds. Citigroup, TPG Capital and Edward Mule’s Silver Point Capital oppose Paulson’s proposal. Paulson’s proposal is “nothing more than a litigation tactic designed to attempt to intimidate parties in interest into abandoning any efforts to oppose,” they said in a court filing.
We don’t really care who wins the argument. Distressed investing isn’t an easy task and hedge funds work and fight hard to generate returns. These returns don’t really have much correlation with the market, yet journalists and investors compare these hedge funds’ returns to the S&P 500 index.