Tweet of the week

Fly High Spirit ??

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$100 off for CRC Subscribers!

Early Bird Extended to May 15

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CRC Subscribers Receive An Additional $100 off by emailing info@creditorcoalition.org

Spirit's turbulence coming to an end...

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Our Take:

We don't favor government bailouts, especially for businesses that don't have a viable business model.  Whatever your view of the government’s approach, no one can debate that Spirit's cost structure couldn't support its business model and with limited financial flexibility, a turnaround was doomed. The business wasn't just impaired — it was already dead. R.I.P.

"independent" white-washing?

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Our Take:

Of course, we’ve learned once again of so-called “independent” directors operating behind the curtain, pulling the levers on an ill-fated intercompany settlement that appears designed to siphon value away from holding company creditors.

The key question: will preferred holders succeed in challenging the previously undisclosed ~$400 million intercompany claim that never appeared in the company’s 10-K filed just one day earlier?

What was intended to be a clean, fast-track restructuring is quickly becoming a live test of one of the central tensions in modern prepacks: efficiency versus scrutiny.

let the fun begin....

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Historic reduction of legal fees by 40%

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Our Take:

We have noted our disdain of free-riding professionals, most notably in the Modivcare case where White & Case allegedly threatened to get paid or make the estate pay millions in fees. As we await judgment there, another judge questions exorbitant professional fees. Maybe we shouldn't be surprised to see paralegals billing at over $500 an hour.... but the judge sure was...

Where SCOTUS meets Credit: A Collision Point

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Our take:

On April 27, 2026, SCOTUS heard oral arguments in a pivotal case testing whether federal law preempts state-law failure-to-warn claims... the outcome could materially reshape Bayer/Monsanto’s long-tail litigation exposure....

Liability Management and Software

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The Trilemma: Commons, Anticommons, and Agency

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Decomposing S&P 500 Returns

If we decompose the S&P 500®’s price return over the last 2 years, we see that almost all of the performance has been driven by earnings growth. Just 3.70% of the S&P 500®’s 40.49% price appreciation can be attributed to multiple expansion. And as you can see from the blue bars in the chart below, multiples have actually been a net detractor of returns for the index since the start of 4Q25. At the peak of the multiple re-rating, the S&P 500® saw its forward P/E ratio go from 23.12x (10/29/25) to 19.13x (3/30/26). That’s good for a 17.27% drop in its forward multiple. But what makes this even more impressive is that this re-rating has occurred alongside expected margin expansion. Following the cycle trough in net profit margins back in 1Q24, that number has steadily marched higher ever since, going from 11.2% all the way up to 13.4% expected for 1Q26. And if we look out to 4Q26 to see where analysts are expecting net profit margins to be, we see them grinding even higher to 14.6%. Impressive. Interestingly, this is an unusual combination as investors tend to be willing to pay a premium for margin expansion, implying that multiples should be drifting up, not down.  

If you want to make a bull case for the remainder of the year, the ingredients are certainly coming together. Analysts are expecting earnings growth of 18.6% for CY2026. That by itself should propel the market higher. But if we add on some multiple expansion, that full year S&P 500®target should be even higher. It’s impressive that we’ve rallied this far on earnings growth alone. Multiple expansion piggybacking on increasing net profit margins is just icing on the cake. 

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