Billions of Dollars 'Vanished': Low-Profile Bankruptcy Rings Alarms on Wall Street

[bucolic_frolic]

5. How does private credit differ from mortgage-backed securities?

The firms mentioned, and there are more, are intertwined with investment names we all know and perhaps utilize. If this is the tip of the iceberg, it has potential to be larger than the subprime mortgage crisis. These are not homes, even in aggregate, they are companies.

How does private credit differ from mortgage-backed securities? In terms of shaky equity and loose lending, I suspect not by a lot.

And on edit, to add: Private equity as well as public companies that manage brands - essentially a collection of brands culled from parts of other companies that divested or went bankrupt - are common. How many of these might have suspect balance sheets?

A quick search reveals several well-known names that held brands as part of their business:

Sears, Instant Brands, Forma Brands, JC Penney, Liberated Brand, Franchise Group, Ascena Retail, Authentic Brands.

Typically the brands are acquired because they make a quality product but are no longer profitable. The new parent aims to fix them.

That being said, the life-cycle of capitalism is venture capital, IPO, then a series of debt extractions by wealthy people or companies resulting in repeated bankruptcies, and finally collapse in some cases. These things are not strictly tied to the economic cycle, they go on all the time. It's how you make money if you're an owner along the way!