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Book Review: "Distressed Debt Analysis" By Stephen Moyer

Quick synopsis: Very good book, assumes a basic working knowledge of finance/valuation without over-assuming, fluidly and fluently takes you from theory to post-reorganization divestiture strategy hitting on major milestones along the way.

Full synopsis: My knowledge of bankruptcy has been largely based on classroom learning. I reached out to a guy who works in the space to ask if he had any suggestions on books that could help me get a more real-world understanding of the bankruptcy process, and more specifically investing through the bankruptcy process, without actually working in the space. He strongly recommended this book and said it would "get (me) 80% of the way there, and the last 20% you just have to learn from actually doing it".

There are a few notable strengths of this book. First, it would be exceedingly easy, and excusable, given the subject matter for the author to get constantly dragged and bogged down in the esoteric details of bankruptcy. Throughout the 300 pages, I really did not feel that that ever happened, which is a feat unto itself. Moyer was masterfully adept at making sure to cite and point out relative legal bankruptcy (NYSE:BRC) and tax (NYSE:IRC) codes while keeping it at the appropriate level given the intended audience (definitively not practicing bankruptcy lawyers). Additionally, he did well to give nuance on how case law has evolved in certain fields. Second, Moyer seems to have identified his audience, the educated investor that typically deals with equities but wants to become conversant in distressed debt. As such, he does a great job knowing what topics are important, and how in-depth he needs to go into them. For example, he speeds over the topics of valuing the enterprise, and then jumps right into how the value of an enterprise for a distressed entity differs from the value of your typical equity.

Another strength of the book is Moyer's continual use of case studies. Obviously the specific fact patterns of any bankruptcy will highly impact how it plays out, and it is exceedingly hard to generalize. Moyer proves quite adroit at balancing this inherent ambiguity with the reader's want for hard rules/examples. The book is now about a decade old, and it was written with the dot com busts freshly in mind, so some of the examples look nothing like anything recently. (Incredible amounts of debt with zero assets, straight junior debt with zero bank debt, huge amounts of convertible debt which the companies' clearly thought they would never have to pay back). But the author actually is quite prescient in understanding that while these specific circumstances are not the norm, the lessons are applicable across time.

This book could easily have slid into the theoretical and that did not happen at all. I found it to be a fantastic resource and one of the top ten investing books I've ever read. I would highly recommend it for the novice debt investor looking to get a foothold in the sometimes frustratingly opaque worl