Why This Hedge Fund Hasn't Purchased Atlantic City Debt

David Tawil is the co-founder of Maglan Capital, an event-driven hedge fund that focuses on distressed events and situations like bankruptcy.

Tawil recently joined Benzinga’s #PreMarket Prep to talk about why his fund hasn’t purchased any Atlantic City Debt.

Tawil started by explaining that the Chapter 9 bankruptcy process is challenging and a last resort.

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“We’re dealing with an environment where there’s not a lot of bankruptcy going on because we have record-low interest rates for a record period of time,” he said.

There are many companies in distressed situations for various reasons, and Tawil said that their equities trade particularly low during the rehabilitation process.

“That’s where we’ve been focused recently, on a lot of turnaround equity stories,” he said.

But Tawil said his fund is going to wait to see a “sparkle of life” in Atlantic City before going in to purchase debt. He explained that there’s a lot in flux in terms of how many casinos will shut down, and there are rumors that Carl Icahn will try to throw a lifeline for one of them.

#AtlanticCity getting ready for an "emergency manager"? http://t.co/mzZyYJshgx

— Maglan Capital (@MaglanCapital) November 24, 2014

“Until there is some sort of remedy, even a small spark in terms of what’s going to go ahead and lead to the transition from gaming to something else, I think we’re just going to be on a watch-and-wait mode for now, no matter low those bond prices go,” he said.

Tawil also talked about the Detroit bankruptcy and Argentinian oil.

Check out his full interview here:

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