Cheyne Finance first SIV to stop repaying short-term debt

A

ASusilovic

Cheyne Finance has become the first structured investment vehicle to stop repaying its short-term debt after administrators won court backing to declare it in breach of insolvency tests. The move came as Cheyne Finance entered final negotiations with four banks bidding for its assets, which stood at $6.6bn (£3.2bn) at the start of last month. Cheyne said it was wrong to assume the holders of mezzanine debt - the lowest-rated tranche - would be wiped out. The court’s insolvency decision - using a balance sheet measure - could prove controversial, however, as the SIV still has $1.3bn of cash. By the same measure, many other SIVs would be “insolvent”.

http://www.ft.com/cms/s/6e6e2f26-7c...c.html&_i_referer=http://ftalphaville.ft.com/

I think this might sent shock waves through commercial paper market...
 
When are post August hedge fund redemptions due - last 60 day notice period was for pre August (right?). Point is if there is a wall of redemptions hitting a load of ponzi schemes then something has to give. Not only did e.g. BSC funds assign their own accounting based valuations i.e. with no corresponding cash flow but they paid their fees and performance with real cagsh not accounting earnings (NO! surely not, what was good enough for clients would have been good enough for them, right?).
 
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