Prediction Not checkable as stated
Creditor-on-creditor violence and priming transactions will increase in coming years
“And this creditor on creditor violence is a rising trend that I don't see going away anytime soon. Until the creditor groups start to write tighter credit agreements, or the courts define very narrow guidelines around how these credit agreements can be interpr…”
Insight
Credit investors are obligated by fiduciary duty to seize value creation
“And I think there's a much more level playing field today, and I think that, look, we all have a fiduciary duty to the investors we serve, and so if the opportunity for value creation exists, it's your obligation to take it.”
Assertion Partly supported
NYC yellow taxi driver profitability is superior to Uber driver earnings
“The profitability of a yellow taxi driver was superior to that of an Uber driver.”
Assertion Not checkable as stated
Many levered borrowers are already unable to satisfy their debts
“What we see today as we look at the earnings power of companies that we're talking to lenders about, that they are in that place already. They are facing real inability to satisfy their debts as they come due, which is one of the classic destinations of insolv…”
Assertion Contradicted
UBS was effectively insolvent before 1998 Swiss Bank merger, says Milgram
“UBS was effectively insolvent and there'd been a shotgun marriage forced by the Swiss national bank.”
Assertion Not checkable as stated
Distressed assets sometimes trade at valuation premiums to public comps
“So I can tell lots of stories about where you would see something trading in the distress market at a premium from a valuation perspective, to where it's public market comps are trading, which I view is literally insane, but it happens and it happens, believe …”
Prediction Not checkable as stated
Restructuring will drive contract price resets across multiple sectors
“We haven't seen that kind of opportunity since like the early 2000 when natural gas spiked and we had to do a sort of price reset through the petrochemicals chain. But it strikes me that we're going to see that across a number of sectors in the coming period.”
Insight
Milgram: Passive creditors risk losing as much value to restructuring as fundamental decay
“And as a consequence, you could see the reorganization process, if you are not an actively engaged creditor, destroy as much value as the underlying fundamentals are destroying. And so you cannot be a passive participant in a reorganization.”
Insight
The LBO market acts as the manufacturing division for distressed investing
“So if you think about the leverage buyout market as the manufacturing division of the distressed market, the growth of the distressed investor mirrored the growth of the LBO investor for good reason.”
Insight
Bank loan portfolio decisions are driven entirely by regulatory pressures
“Banks in particular make decisions about their portfolio for three reasons. Regulatory, regulatory, and regulatory. Because banks are regulated industries. As a regulated industry, they are very focused on how they deal with their regulator and the bank examin…”
Insight
Milgram: Original lenders lack incentives and capacity to work through troubled loans
“Oftentimes original lenders don't have the manpower or the time or sometimes even the economic interest to go super deep in understanding how they're going to work through those idiosyncratic problems.”
Insight
Working capital management is misunderstood and undervalued in levered companies
“Because problems at a company can persist for a very long time, they punctuate because of a liquidity problem. And at the end of the day, working capital management is a really misunderstood and undervalued portion of highly levered company management, and it …”
Disclosure
Marblegate avoids oil and gas due to uncontrollable commodity risk
“We stayed away from oil and gas primarily because as we thought about it, there was, you were primarily taking commodity price risk. And that's a hard thing for us. Well, impossible thing for us to control. And so the tools of restructuring our value biased ap…”
Disclosure
Marblegate buys legal documents rather than just companies to drive restructuring
“First and foremost, part of our investment process is that while we invest in companies, we Buy documents. And those documents are what enable us to drive the investment process.”
Insight
Milgram: Middle-Market Distressed Credit Avoids Multi-Deal Mega-Fund Conflicts
“Honestly, it's why we like to be in the middle market because there's way, way, way less of that in the middle market. We are oftentimes the only secondary buyer in a credit we're working on. We're certainly the early Identifier and early adopter of that credi…”
Prediction Not checkable as stated
Shift to just-in-case inventory will strain corporate balance sheets
“You're going to move from just in time to just in case. All of those things have balance sheet implications, Which today's balance sheets are not structured to handle.”
Insight
Milgram: You invest with a butcher's knife, but restructure with a scalpel
“This is an in the weeds game. And so one of the things I talked to my investment team about is you invest with a butcher's knife, but you restructure with a scalpel. And if you don't do the detail work, You're going to get a bad outcome.”
Assertion Supported
US middle market represents 75% of bankruptcies and restructurings
“Meanwhile, the middle market constitutes Roughly a third of US GDP has forty eight million employees. And at the same time, the middle market constitutes about three quarters of all bankruptcies and restructurings.”
Insight
Milgram: Middle-market companies typically have only 12 to 18 creditors
“A typical creditor group in a middle market company, be 1215, maybe 18 creditors, as opposed to 50 or a hundred in a large name, they have less flexible capital structure.”
Disclosure
Milgram: About three-quarters of Marblegate's purchases are direct-sourced and non-competitive
“About three quarters of what we have bought has been direct sourced, non-competitive.”
Assertion Supported
Milgram recounts Marblegate's landmark TIA Section 316(b) lawsuit against EDMC
“And we brought EDMC to court, to district court in New York, where the district court ruled in our favor. Now, in fairness, it was appealed and went to the second circuit court where the second circuit broadly read the Section three 16 B and said, we didn't ha…”
Disclosure
Milgram: Marblegate bought 46 NYC taxi medallions at Citibank foreclosure auction
“Our first purchase was of outright medallions and literally found out about it by doing what any good distress guy does. I opened the wall street journal and I immediately turned to the distress guy sporting pages, which are the foreclosure notices in the back…”
Disclosure
Milgram became a licensed NYC taxi driver to conduct investment diligence
“So one of the pieces of our diligence process is I became a licensed taxi driver and went out and drove cabs, which I still do.”
