AnonymousAlso

Credit Default Swaps May Be Playing a Supporting Role in Chrysler Bankruptcy Filings

Why do CDS have anything to do with it? They are marked to market every day so most of the money is likely made before the bankrupty.

Plus, a 'credit event' which is what triggers payout on a Credit Default Swap doesn't have to be a bankrupty. A debt reorganization is likely to be treated as a 'credit event'.

Look at what happenned at Fannie & Freddie when they were taken over - but not bankrupted - that triggered payouts on the credit default swaps.