The Art of Vulture Investing: Adventures in Distressed Securities Management

Praise for The Art of Vulture Investing "Over the years, George Schultze has demonstrated considerable knowledge of distressed securities and value investing. He now shares his extensive overall experience in this very sector in a clear and understandable manner, which should be of considerable interest to any person interested in the subject." —Grant Stoddart, CEO, Sharp Performance USA, Inc. "George's easy-to-read style compels the reader to learn more about the opportunities to invest in troubled companies. It's a good read for anyone interested in learning how to tackle the tough issues with a thoughtful and honest approach." —Ron S. Geffner , Partner, Sadis & Goldberg LLP "Happy to see George has learned his lessons well." —Phil Smith , adjunct professor at Columbia Business School, Managing General Partner, Private Equity Partnership, and Vice Chairman of Spencer Trask & Co. "This book offers a fascinating inside look into the specialized, and often misunderstood, world of distressed debt investing. The strategies and tactics that these investors use to create or realize value in distressed companies are memorably illustrated through one prominent investor's personal experiences—blow-by-blow—in some of the most challenging and controversial restructurings of the past decade. This is not investing for the faint of heart." —Professor Stuart C. Gilson , Steven R. Fenster Professor of Business Administration, Harvard Business School and author of Creating Value Through Corporate Restructuring: Case Studies in Bankruptcies, Buyouts, and Breakups "A great inside account showing that vulture investors don't feed on carcasses, but resurrect failing businesses. They allocate capital more efficiently and often save and create jobs. Vultures in nature don't add value; vulture investors like George Schultze do." —Charles E. F. Millard , Head of Pension Relations at Citigroup; former director, Pension Benefit Guaranty Corporation

Foreword ix Acknowledgments xi Preface xiii CHAPTER 1 Emerging from the Egg 1 CHAPTER 2 Learning to Scavenge 17 CHAPTER 3 Looking for Prey 39 CHAPTER 4 Waiting On a Limb 63 CHAPTER 5 Swooping In: Tropicana 73 CHAPTER 6 Fighting Over the Carcass: Chrysler 95 CHAPTER 7 Digesting the Remains 115 CHAPTER 8 A Vulture’s Philosophy 131 APPENDIX 1 Net Operating Loss Carry Forwards 139 APPENDIX 2 Copy of Continued Objection by Ad Hoc Committee of Washington Group Class 7 Claim Holders 141 APPENDIX 3 Letter to Washington Group’s Board of Directors 153 APPENDIX 4 Shareholder Complaint against Winn–Dixie Board et al. 157 APPENDIX 5 Objection by Schultze Asset Management to Owens Corning Disclosure Statement About the Authors 185 Index 189

GEORGE J. SCHULTZE is a highly regarded authority on distressed securities investing who has been active in this field since 1994. In 1998, he founded Schultze Asset Management, LLC to offer global clients an opportunity to co-invest through a variety of investment vehicles. He is a frequentspeaker at investment conferences and has been interviewed by journalists from Bloomberg, Fox, CNBC, TheStreet.com, CNN, the Wall Street Journal , the Dow Jones Daily Bankruptcy Review , and many others. He is a director of the Hedge Fund Association and is also active in philanthropic activities through the Schultze Foundation. Mr. Schultze earned MBA and JD degrees from Columbia University. JANET LEWIS is a writer, editor, and marketing/PR consultant with more than twenty years of experiencecovering all aspects of finance. Ms. Lewis has written for publications in New York, London, and Paris including Fortune , the Banker, Global Finance, the European, Dealmaker, FX Week, where she served as European editor, and Institutional Investor , where she was associate editor.