Paul Singer Has A Plan


It’s easy. Step one: Buy credit default swaps. Step two: Sue to have company whose CDS you own put into bankruptcy against its will and before your swaps expire.

Elliott Management Corp. has been adding to derivatives trades that would pay off if Caesars Entertainment Corp. defaults as the hedge fund helps orchestrate a bankruptcy plan for the casino operator’s biggest unit, according to two people with knowledge of the trading.

Step three: Righteously insist that the above makes no sense whatsoever. Step four: Laugh maniacally and count your money.

“The allegation that EMC also holds credit-default swaps is a red-herring which adds nothing to Caesars’ claims,” the hedge fund said in a court document filed Nov. 26. “It defies logic to imply that EMC would intentionally seek to destroy the value of the debt holdings of funds it manages in order to collect on the CDS.”

Elliott Said to Buy Caesars Swaps Amid Bankruptcy Talks [Bloomberg]