Corporate Distress, Credit Default Swaps, and Defaults: Information and Traditional, Contingent, and Empty Creditors

Federal securities law seeks to ensure the quality and quantity of information that corporations make publicly available. Informational asymmetries associated with companies in financial distress, but not in bankruptcy, have received little attention. This Article explores some important asymmetries in this context that are curious in their origin, nature, and impact. The asymmetries are especially curious because of the impact of a world with credit default swaps (CDS) and CDS-driven debt “decoupling.” The Article explores two categories of asymmetries. The first relates to information on the company itself. Here, the Article suggests there is fresh evidence for the belief that troubled companies may prove lax in securities law compliance and for the existing “final period” explanation for such laxity. The Article also offers two new explanations: one based on the requirements for class action certification in Rule 10b-5 litigation and the other based on uncertainties as to private enforceability of “Management’s Discussion and Analysis” disclosure requirements. Building on the existing analytical framework for decoupling, the Article also examines a less obvious category of asymmetries: “extra-company” informational asymmetries flowing from the CDS and CDS-driven debt decoupling activities of third parties. Such third-party activities can be determinative of a company’s prospects, but reliable public information on the presence, nature, and magnitude of such activities tends to be scant. Here, even the company itself, not just investors, may not have the requisite information, including information on the highly counterintuitive and unusually complex incentives that such third parties may have. Unlike traditional creditors, “empty creditors with a negative economic ownership” as well as certain other buyers of CDS protection can have strong incentives to intentionally cause corporations to go bankrupt even when bankruptcy would make little sense. Such third parties may profit not only from actual defaults on financial covenants—at just the right times—but also from artificially manufacturing “faux” defaults or seizing on real, but largely technical, defaults. The Article examines such CDS and “net short” creditor matters through the lens of four examples. The three most important and recent of these examples have not previously been considered in the academic literature: Norske Skog (a Norwegian lumber company) (involving Blue Crest and GSO Capital Partners), Hovnanian (an American home builder) (involving GSO Capital Partners), and Windstream Services (an American telecommunications company) (involving Aurelius)

Delineating the role of FANCA in glucose-stimulated insulin secretion in β cells through its protein interactome

Hyperinsulinemia affects 72% of Fanconi anemia (FA) patients and an additional 25% experience lowered glucose tolerance or frank diabetes. The underlying molecular mechanisms contributing to the dysfunction of FA pancreas β cells is unknown. Therefore, we sought to evaluate the functional role of FANCA, the most commonly mutated gene in FA, in glucosestimulated insulin secretion (GSIS). This study reveals that FANCA or FANCB knockdown impairs GSIS in human pancreas β cell line EndoC-βH3. To identify potential pathways by which FANCA might regulate GSIS, we employed a proteomics approach to identify FANCA protein interactions in EndoC-βH3 differentially regulated in response to elevated glucose levels. Glucose-dependent changes in the FANCA interaction network were observed, including increased association with other FA family proteins, suggesting an activation of the DNA damage response in response to elevated glucose levels. Reactive oxygen species increase in response to glucose stimulation and are necessary for GSIS in EndoC-βH3 cells. Glucose-induced activation of the DNA damage response was also observed as an increase in the DNA damage foci marker γ-H2AX and dependent upon the presence of reactive oxygen species. These results illuminate the role of FANCA in GSIS and its protein interactions regulated by glucose stimulation that may explain the prevalence of β cell-specific endocrinopathies in FA patients

Size-Dependent Transition to High-Dimensional Chaotic Dynamics in a Two-Dimensional Excitable Medium

The spatiotemporal dynamics of an excitable medium with multiple spiral defects is shown to vary smoothly with system size from short-lived transients for small systems to extensive chaos for large systems. A comparison of the Lyapunov dimension density with the average spiral defect density suggests an average dimension per spiral defect varying between three and seven. We discuss some implications of these results for experimental studies of excitable media.Comment: 5 pages, Latex, 4 figure

Pathogenic variants in COL6A3 cause Ullrich-like congenital muscular dystrophy in young Labrador Retriever dogs

The collagen VI-related muscular dystrophies in people include a broad spectrum of diseases ranging from the severe Ullrich congenital muscular dystrophy to the mild Bethlem myopathy. Clinical features are attributable to both muscle and connective tissue and include progressive muscle weakness and respiratory failure, hyperlaxity of distal joints, and progressive contracture of large joints. Here we describe two different COL6A3 pathogenic variants in Labrador Retriever dogs that result in autosomal recessive or autosomal dominant congenital myopathies with hyperlaxity of distal joints and joint contracture, similar to the condition in people

The XMM Cluster Survey: Forecasting cosmological and cluster scaling-relation parameter constraints

We forecast the constraints on the values of sigma_8, Omega_m, and cluster scaling relation parameters which we expect to obtain from the XMM Cluster Survey (XCS). We assume a flat Lambda-CDM Universe and perform a Monte Carlo Markov Chain analysis of the evolution of the number density of galaxy clusters that takes into account a detailed simulated selection function. Comparing our current observed number of clusters shows good agreement with predictions. We determine the expected degradation of the constraints as a result of self-calibrating the luminosity-temperature relation (with scatter), including temperature measurement errors, and relying on photometric methods for the estimation of galaxy cluster redshifts. We examine the effects of systematic errors in scaling relation and measurement error assumptions. Using only (T,z) self-calibration, we expect to measure Omega_m to +-0.03 (and Omega_Lambda to the same accuracy assuming flatness), and sigma_8 to +-0.05, also constraining the normalization and slope of the luminosity-temperature relation to +-6 and +-13 per cent (at 1sigma) respectively in the process. Self-calibration fails to jointly constrain the scatter and redshift evolution of the luminosity-temperature relation significantly. Additional archival and/or follow-up data will improve on this. We do not expect measurement errors or imperfect knowledge of their distribution to degrade constraints significantly. Scaling-relation systematics can easily lead to cosmological constraints 2sigma or more away from the fiducial model. Our treatment is the first exact treatment to this level of detail, and introduces a new `smoothed ML' estimate of expected constraints.Comment: 28 pages, 17 figures. Revised version, as accepted for publication in MNRAS. High-resolution figures available at http://xcs-home.org (under "Publications"

Stochastic Inflation Revisited: Non-Slow Roll Statistics and DBI Inflation

Stochastic inflation describes the global structure of the inflationary universe by modeling the super-Hubble dynamics as a system of matter fields coupled to gravity where the sub-Hubble field fluctuations induce a stochastic force into the equations of motion. The super-Hubble dynamics are ultralocal, allowing us to neglect spatial derivatives and treat each Hubble patch as a separate universe. This provides a natural framework in which to discuss probabilities on the space of solutions and initial conditions. In this article we derive an evolution equation for this probability for an arbitrary class of matter systems, including DBI and k-inflationary models, and discover equilibrium solutions that satisfy detailed balance. Our results are more general than those derived assuming slow roll or a quasi-de Sitter geometry, and so are directly applicable to models that do not satisfy the usual slow roll conditions. We discuss in general terms the conditions for eternal inflation to set in, and we give explicit numerical solutions of highly stochastic, quasi-stationary trajectories in the relativistic DBI regime. Finally, we show that the probability for stochastic/thermal tunneling can be significantly enhanced relative to the Hawking-Moss instanton result due to relativistic DBI effects.Comment: 38 pages, 2 figures. v3: minor revisions; version accepted into JCA

Anomalous Heat Conduction and Anomalous Diffusion in Low Dimensional Nanoscale Systems

Thermal transport is an important energy transfer process in nature. Phonon is the major energy carrier for heat in semiconductor and dielectric materials. In analogy to Ohm's law for electrical conductivity, Fourier's law is a fundamental rule of heat transfer in solids. It states that the thermal conductivity is independent of sample scale and geometry. Although Fourier's law has received great success in describing macroscopic thermal transport in the past two hundreds years, its validity in low dimensional systems is still an open question. Here we give a brief review of the recent developments in experimental, theoretical and numerical studies of heat transport in low dimensional systems, include lattice models, nanowires, nanotubes and graphenes. We will demonstrate that the phonon transports in low dimensional systems super-diffusively, which leads to a size dependent thermal conductivity. In other words, Fourier's law is breakdown in low dimensional structures

Massive stars as thermonuclear reactors and their explosions following core collapse

Nuclear reactions transform atomic nuclei inside stars. This is the process of stellar nucleosynthesis. The basic concepts of determining nuclear reaction rates inside stars are reviewed. How stars manage to burn their fuel so slowly most of the time are also considered. Stellar thermonuclear reactions involving protons in hydrostatic burning are discussed first. Then I discuss triple alpha reactions in the helium burning stage. Carbon and oxygen survive in red giant stars because of the nuclear structure of oxygen and neon. Further nuclear burning of carbon, neon, oxygen and silicon in quiescent conditions are discussed next. In the subsequent core-collapse phase, neutronization due to electron capture from the top of the Fermi sea in a degenerate core takes place. The expected signal of neutrinos from a nearby supernova is calculated. The supernova often explodes inside a dense circumstellar medium, which is established due to the progenitor star losing its outermost envelope in a stellar wind or mass transfer in a binary system. The nature of the circumstellar medium and the ejecta of the supernova and their dynamics are revealed by observations in the optical, IR, radio, and X-ray bands, and I discuss some of these observations and their interpretations.Comment: To be published in " Principles and Perspectives in Cosmochemistry" Lecture Notes on Kodai School on Synthesis of Elements in Stars; ed. by Aruna Goswami & Eswar Reddy, Springer Verlag, 2009. Contains 21 figure