When Is a Distressed Debt Trade Considered Consummated?

Trades in distressed debt or bankruptcy claims are often characterized by cursory, and sometimes oral, agreements to enter into a trade, followed by months during which remaining terms are negotiated prior to settlement of the trade.  However, during the period between the initial agreement and the settlement of the trade, the value of the subject assets can fluctuate, sometimes significantly.  This may create certain disincentives for one party to complete the trade, which can lead to litigation.

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