The Razor's Edge #18: The Bankruptcy Market With Sam Zughayer

One of the stranger dislocations in 2020 has been the behavior of stocks that are bound to or have already filed bankruptcy, with Hertz's offering of new equity this week as the biggest example of the phenomenon. We speak with Sam Zughayer, managing director of Berenson & Company, about what might explain this, what he's seeing, and where this may end up. Topics Covered 4:00 – Where Sam gets involved in the process normally 8:00 – What makes this time different 14:00 – What the government learned in 2009 and how that affects things 18:30 – Rule of contract law in the current climate 21:00 – The implication of the Hertz ruling 27:00 – The capital structure component and the structural effects for business 32:00 – The Hertz precedent and effect on other bankruptcies 35:00 – The longer-term legacies of this period 38:30 – The problem with shale oil 45:00 – Is this unhealthy? The Zombie element of sustaining firms. 47:00 – And the formerly healthy companies that fall, what of them? 50:00 – Looking back at stock buybacks 53:00 – Will behavior change?