But buyers of distressed debt, who bought their holdings at a pittance, stand to do well at the sale.

While highly successful as buyers of distressed debt, the investors have no experience running a specialty retailer.

The investment firm grew rapidly, focusing on high-yeld bonds, distressed debt, and private equity.

Private equity shops are increasing their reach, adding on businesses like distressed debt and capital restructuring that use to belong to banks alone.

Elliott is well known for its investment in the distressed debt of Peru.

Paulson also has a long track record of investing in distressed debt, bankruptcies and restructurings.

Another is that commercial property is intrinsically less liquid than even distressed third-world debt.

While building distressed debt, the European branch of the firm also writes loans for small companies that are unable to obtain financing.

Now, with the industry facing the prospect of huge damage awards, investors seem to view the stocks as only slightly safer than distressed debt.

And recently, new funds have emerged that focus on private equity and distressed debt.