Cherokee Acquisition’s Claims Put Market is the first platform to match vendors seeking credit protection on risky accounts receivables with investors offering protection. The advantage to a vendor of Claims Put Market is that their requested put option is shown to multiple investors that a vendor might not otherwise find. This “broadcasting” of a vendor’s requested put option results in a more transparent and fair market. Claims Put Market uses a put option agreement called a Simple Claims Put that transfers the bankruptcy risk of a single customer.
Claims Put Market has developed three key innovations:
- Transparent platform: A vendor’s request to purchase a put option is shown to multiple well-capitalized investors. These investors compete to offer each vendor the best price and terms. After agreeing on price and terms, a vendor can review the matched investor’s financial information prior to closing.
- Simplified documents: Claims Put Market’s Simple Claims Put is a three-and-one-half-page agreement. In the event of a customer’s bankruptcy, the vendor sells (or puts) its valid receivables to the investor at a pre-negotiated purchase rate, subject to the terms of the Simple Claims Put. This sale is effectuated through an agreement called a Simple Assignment of Claim.
- Transparent reference prices: Most vendor put options are priced with reference to Credit Default Swap (CDS) prices. Claims Put Market displays CDS prices of customers of interest to the vendor community. Viewing displayed CDS prices gives vendors a sense for the potential price of a put option.
Claims Put Market leverages off the success of Cherokee Acquisition’s Claims Market platform (https://claims-market.com/) and the growing acceptance of the Simple Assignment of Claim document (https://s3.us-east-2.amazonaws.com/claims-market-assets/sac.pdf) among sellers and buyers of bankruptcy claims.
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