Bo Peng

Bo Peng suggests a simple way to eliminate the destructive positive feedback loop created by bondholders owning credit-default swaps on their debt: reduce their say in bankruptcy court by the value of the CDSs they own.

Hedging or taking risk has nothing to do with worthiness as a man or a woman. What I'm saying is that your say on the company should be proportional to your exposure, including hedging. What I did not say is that you could buy bond, then over-hedge with 200% CDS, then use your bond position in pre-restrucutring talks to minimize recovery, and get a windfall with CDS. As someone said in comments to my article, this is like buying a run-down building and insurance then burning down the building and claiming insurance.