The primary short thesis for ALX hinged on upcoming debt maturities and an imminent dividend cut. However, the company successfully restructured its near-term debt. Furthermore, CEO Steve Roth has signaled he will not cut the dividend, supported by cash reserves and a planned asset sale that would provide further liquidity.

Out-of-court restructurings, or LMEs, introduce uncertainty into a company's capital structure. This forces the market to apply an additional 10-20 point discount to the trading price of the company's loans, creating a significant alpha-generating opportunity for specialized investors who can accurately underwrite the LME process.

Concerns about Vornado controlling Alexander's ($ALX) are mitigated by CEO Steve Roth's incentives. Key executives own ~46% of ALX versus ~10% of Vornado. Roth's personal dividend income from his ALX stake ($12M/year) dwarfs his compensation from the company, suggesting he is highly motivated to maximize ALX's value.

In a distressed scenario, simply asserting seniority as a junior capital provider is ineffective. You cannot force the majority owner and management team, whom you've just told are worthless, to run the business for your benefit. The only viable path is to renegotiate and realign incentives for all parties to work towards a recovery together.

In a near-death scenario, Ladder successfully negotiated with major creditors by convincing them of the real possibility of getting zero. This little-discussed survival tactic was key to cleaning up their balance sheet, demonstrating that even large institutions will negotiate when faced with a total loss.

Aegon's Global Head of Leverage Finance, Jim Schaefer, shares a critical heuristic: once a leveraged loan's price falls below the 80-cent mark, it has a high probability of entering a formal restructuring. This price level acts as a key warning indicator for investors, signaling imminent and severe distress.

In the cutthroat world of distressed debt, having a reputation as a frequent and fair "repeat player" is a key asset. Other creditors are more likely to collaborate and less likely to act opportunistically if they know they will encounter your firm again, leading to better resolutions.

The activist purchased a large, illiquid 20% stake from a motivated seller at a 25% discount to the last traded price. This price itself was far below tangible book value. This 'discount on a discount' front-loads returns and builds in a significant margin of safety before any operational improvements are made.

Jeff Aronson reframes "distressed-for-control" as a private equity strategy, not a credit one. While a traditional LBO uses leverage to acquire a company, a distressed-for-control transaction achieves the same end—ownership—by deleveraging the company through a debt-to-equity conversion. The mechanism differs, but the outcome is identical.