As per Marc Lasry, while the economic situation has caused “misery for employees and business owners”, debt investors can “do extremely well making loans to companies that falter.”
Billionaire businessman Marc Lasry has called the COVID-19 pandemic an “once-in-a-lifetime opportunity” for debt investors as the volatile economic climate has caused even recognised names such as Neiman Marcus, Hertz and JC Penney to file for bankruptcy.
“I know you're not supposed to say this, but it's an once-in-a-lifetime opportunity. You're not going to see this again: Where you've actually got an economy that's fine, and you've got a Fed pumping trillions of dollars in,” Lasry told Yahoo Finance.
Worth an estimated $1.8 billion as per Forbes, Lasry is the co-founder and CEO of hedge fund company Avenue Capital – which specialises in investments in distressed businesses and co-owner of the NBA team Milwaukee Bucks.
He added that, while the economic situation has caused “misery for employees and business owners”, debt investors can “do extremely well making loans to companies that falter.”
Avenue Capital has itself invested in JC Penney and Macy’s. Lasry noted: “For us, you've got an opportunity to invest at a senior level and do extremely well. So you'll either get paid out, or you're going to end up owning the equity of this company.”
He further compared the situation to the Great Recession adding: ““You've got a lot of companies that are in trouble. It’s a once in a lifetime, but it happened 10 years ago, also.”
“The pandemic has divided the business landscape into the haves and the have-nots, where the haves are the companies who have liquidity, who have been able to borrow money, they've got the ability to wait this virus out. Have-nots are companies like a JC Penney that end up filing and they don't have to pay their debts while they're working out a restructuring. So for us today, huge amounts of opportunities,” he added.
In the United States, chapter 11 bankruptcy filings rose 26 percent year-on-year (YoY) for H1FY21 with as many as 3,604 companies filing for protection, as per a Wall Street Journal report.Follow our full COVID-19 coverage here