In an interesting twist, Chris Whalen of Institutional Risk Analytics is making the case that Bank of America is better off at this point to pursue bankruptcy to restructure their mortgage liability problem.
It is yet another case of bankruptcy being used appropriately to restructure debt so the person or business can move forward.
Bank of America could enter a Chapter 11 bankruptcy, deal with their massive mortgage liabilities they inherited when they bought Countrywide, and emerge out the other side.
Whalen says, “The only sane way of fixing this and I mean fix it so that Bank of America comes out of the process restructured, ready to support growth, support leverage, is a classic chapter 11…”
That’s one bankruptcy filing you would not normally expect to see but it certainly seems to be a logical consideration.