Thomas Cook’s Rescue Tests Reputation of Default Protection
- Rulings on CDS could undermine confidence in contracts
- Funds’ plan to trigger swaps adds pressure for market overhaul
Photographer: Mike Kemp/Getty Images
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The $10 trillion market for derivatives that pay out if a company goes bust faces a test of its credibility as U.K. travel agent Thomas Cook Group Plc heads toward a $1.1 billion rescue.
Thomas Cook filed for Chapter 15 bankruptcy protection in the U.S. on Monday as part of a broader debt restructuring. But the filing stopped short of stating the company is insolvent, an ambiguity that means hedge funds holding credit-default swaps insuring Thomas Cook debt may not get their money.