The Information : Nvidia-Backed Cloud Provider Lambda in Talks to Raise $350 Mil

Nvidia-Backed Cloud Provider Lambda in Talks to Raise $350 Million Ahead of IPO

The Takeaway
  • Lambda seeks to raise $350 million in pre-IPO funding
  • Mubadala Capital in talks to lead round
  • Startup plans second half IPO, slight delay from first half

Lambda, an upstart cloud provider that rents out Nvidia AI chips—and whose biggest customer was recently Nvidia itself—is trying to raise at least $350 million before a potential initial public offering this year, according to a person familiar with the discussions.

Mubadala Capital, which manages money for the United Arab Emirates government and other investors, is in talks to lead the funding round, which is structured to sell stock to investors at about a 20% discount to the price at which Lambda would sell stock in an IPO, the person said. It would be the latest in a string of AI-related deals by government-backed funds from the UAE.

The round would give Lambda more cash leading up to an IPO it has been planning for the second half of this year, according to two people who have spoken to the firm’s executives. That’s a slight delay from the company’s previous plans to go public in the first half of the year.

Spokespeople for Lambda and Mubadala declined to comment.

The terms of the new financing would pressure the company to list publicly. The deal, which is structured as convertible notes, would force Lambda to award participating investors millions of dollars of additional equity or cash interest payments if it doesn’t go public within a year, the person said.

Investors in the convertible notes would also have an opportunity to invest in the IPO, this person said. The newsletter Newcomer earlier reported some of Lambda’s funding plans.

A month ago, Lambda hired Heather Planishek, a former chief accounting officer at Palantir, as its chief financial officer.

Lambda’s fortunes in the public market are likely tied to investor sentiment about CoreWeave, a larger competitor that went public last March and is also heavily backed by Nvidia. CoreWeave shares are up more than 90% since the listing, but it has had a rocky few months. Its valuation has roughly been sliced in half since October as investors have worried about its large debt load and delays in its data center projects.

Founded in 2012 by brothers Michael and Stephen Balaban, Lambda is one of a cluster of firms that compete with huge cloud providers such as Amazon Web Services, Microsoft and Google to rent out specialized servers to AI developers.

Nvidia has backed several of these firms, known as neoclouds, as it hedges against the possibility that demand from larger cloud providers might cool. Nvidia also prefers some neoclouds because they are more likely to use a bundle of its hardware, networking equipment and chip software rather than customizing some of those features the way some large cloud providers do.

Lambda generated more than $520 million in revenue in the year that spanned October 2024 to September 2025, the person said. Third-quarter sales rose 80% from a year earlier, the company recently told investors. It lost about $175 million during that period.

Microsoft last fall signed a multibillion-dollar agreement to rent servers from Lambda. And last summer, Nvidia agreed to rent 10,000 of its own AI chips from Lambda for $1.3 billion over four years, and made a separate $200 million deal to rent 8,000 more Nvidia chips over an unspecified time frame.

WSJ : South Korea’s Economy Likely to Grow Faster in 2026

South Korea’s Economy Likely to Grow Faster in 2026
The economy is expected to have grown 1.0% in 2025, slightly stronger than an earlier projection of 0.9%

  • South Korea’s economy is projected to grow by 2.0% in 2026, an increase from the previous forecast of 1.8%.
  • Domestic demand is anticipated to drive economic recovery, fueled by improved consumer sentiment and policy support.
  • Inflation is forecast to average 2.1% in 2026, slightly higher than the prior estimate of 2.0%.

South Korea’s government expects the economy to grow faster than previously forecast 2026, supported by a recovery in domestic demand.

Gross domestic product in Asia’s fourth-largest economy is projected to expand 2.0% in 2026, up from the government’s August forecast of 1.8%, the Ministry of Economy and Finance said Friday in its semiannual outlook.

The economy is expected to have grown 1.0% in 2025, slightly stronger than an earlier projection of 0.9%, the ministry said.

Domestic demand is expected to be the main driver of the recovery, as consumption picks up on improving consumer sentiment and policy support.

Contributions from exports could weaken in 2026 amid higher U.S. tariffs and trade barriers in other markets, despite solid demand for South Korean semiconductors, the ministry said.

Inflation is expected to edge higher, with lower oil prices likely to offset upward price pressures stemming from stronger consumer spending.

For 2026, inflation is forecast to average 2.1%, compared with the government’s previous estimate of 2.0%. Inflation is estimated to have averaged 2.1% in 2025, the ministry said.

WSJ : Saks Closes In on Bankruptcy Financing Package

Saks Closes In on Bankruptcy Financing Package
Bondholder group offers $1.25 billion of bankruptcy financing with aim to take control

  • Saks Global, parent of Saks Fifth Avenue and Neiman Marcus, is nearing a $1.25 billion bankruptcy financing deal, according to people familiar with the situation.
  • Pimco has offered a competing $1.5 billion financing proposal to keep Saks Global operating through bankruptcy, according to people familiar with the situation.
  • Saks Global is expected to file for bankruptcy in the coming days after missing a debt payment of more than $100 million, people familiar with the situation say.

The parent of Saks Fifth Avenue and Neiman Marcus is closing in on a bankruptcy financing package of roughly $1.25 billion, as it prepares to file for bankruptcy in the coming days, according to people familiar with the situation.

A group of bondholders led by Bracebridge Capital and Pentwater Capital is proposing a $1.25 billion debtor-in-possession loan to fund the chapter 11 proceedings, the people continued. The group expects to take control of the company, the people said. A stipulation of the bondholder-group loan is that the management team of the parent company, Saks Global, is terminated, one of them said.

The large bond fund Pacific Investment Management Company, known as Pimco ALV 1.40%increase; green up pointing triangle, has submitted a competing offer to finance the business as a going concern through the bankruptcy process with a $1.5 billion debtor-in-possession loan, the people said. Pimco was a large owner of Neiman Marcus before it was sold to Saks in a $2.65 billion deal that closed in December 2024.

Hanging in the balance is the fate of two of America’s last luxury retailers. Both more than a century old, Saks and Neiman were once a gateway for U.S. consumers to discover coveted European brands. But today, those brands have their own stores and increasingly compete directly with the department stores they supply.

The combination of Saks and Neiman Marcus was supposed to create a luxury powerhouse that would have more clout with suppliers. But things went wrong almost from the beginning. The company also includes Bergdorf Goodman, known as the pinnacle of luxury department-store shopping in the U.S., which Neiman acquired in the 1970s, and the Saks Off 5th discount chain.

A widespread slowdown in luxury goods that began in 2023 hurt sales. Saks struggled to pay vendors, some of whom curtailed shipments or stopped shipping goods altogether, which made it harder for Saks to bring in revenue.

Sales for the quarter ended Aug. 2 fell 13% from a year earlier to $1.6 billion, short of the company’s own expectations, it reported in October. Its net loss widened to $288 million.

Saks Global missed a debt payment of more than $100 million that was due at the end of December and days later its longtime Chief Executive Marc Metrick resigned. Executive Chairman Richard Baker took over as CEO.

Saks has also been dealing with a public-relations challenge after a stylist in its Boston store was charged with fraud and larceny. An internal investigation found he had made fraudulent returns that potentially totaled hundreds of thousands of dollars, according to a criminal complaint filed in Boston’s Municipal Court. The stylist, Suhail Kwatra, denies the charges and sued Saks this week, alleging that Saks retaliated against him for getting a job offer from a rival department-store chain.

FT : A fantasy M&A guide to buying Greenland

A fantasy M&A guide to buying Greenland
The process might be thought of as analogous to one company buying another

Buying and selling countries sounds like the kind of thing that would only happen in a board game. Yet US President Donald Trump is considering making a bid for Greenland, the White House confirmed on Wednesday.

Imagine, for a moment, that the US does indeed think it can acquire Greenland from current owner Denmark in some kind of commercial transaction. The process might then be thought of as analogous to one company buying another. In this case, it would be an unsolicited bid, perhaps like the one Paramount Skydance has made to derail Netflix’s acquisition of media outfit Warner Bros Discovery.

The first question is what Greenland is worth. Finance students will recall two ways to approach that in an M&A scenario. One is “intrinsic valuation”. The American Action Forum, a think-tank, totted up Greenland’s barely tapped mineral reserves at market prices, applied a probability weighting of sorts, and arrived at $186bn. Double that to factor in the value of owning a region critical in a theoretical war with Russia, and call it $370bn.

Alternatively there’s “relative valuation”, which calls upon similar past transactions. Using the same price per square mile as 1803’s Louisiana Purchase, and converting it into today’s money based on historic inflation rates, the price is a measly $300mn. But use instead the 1917 purchase of the comparatively tiny Virgin Islands, also formerly Danish, and that rises to a heady $3.8tn.

In this case, what matters isn’t valuation maths but effective negotiation — the other element of M&A. What does it take to get enough of the right people to agree to a change of control? Since Denmark says Greenland has the right to declare full independence, there’s a theoretical path for its 57,000 residents to voluntarily embark on a process, no doubt a convoluted one, of swapping Danish rule for American stewardship.

Seen in this light, buying Greenland would actually be quite a lot like buying a company: convince enough shareholders to back your offer, and the prize is yours. The US could offer each resident US citizenship and a welcome bonus of $1mn, and the total cost would be some $57bn, increasing the US national debt by just 0.1 per cent. Elon Musk, who has expressed support for a union, could even throw in free Teslas for all.

The catch is that a US-Greenland merger is actually less like a straight takeover, and more like a cash and stock deal, where the “stock” involves becoming American. Just as in an M&A battle — think of Netflix offering a slug of stock to WBD — the question is not just about the sums on offer, but the attractiveness of the acquirer’s shares.

There, Trump has a problem. The US is rich and mighty. But as role models go, it is a flawed one, with lower life expectancy than peers, healthcare twice as expensive as Denmark’s, and a gun homicide rate 65 times higher. A poll by Verian found 85 per cent of Greenlanders would rather not turn American. Besides, the US is run by a government that thinks countries can be traded like companies. That alone makes it a tough sell.

FT : GM discloses $7bn hit from EV transition and China restructuring

GM discloses $7bn hit from EV transition and China restructuring
Detroit-based carmaker says it ‘proactively reduced EV capacity’

General Motors expects to take a $6bn hit as a result of its stalled electric vehicle transition, as a sharp drop in consumer demand continues to take a toll on US car giants.

The Detroit-based carmaker disclosed the charge in a regulatory filing on Wednesday while also recording a $1.1bn service charge relating to a restructuring of its business in China.

Shares fell as much as 1.9 per cent in after-hours trading following the disclosure.

EV sales in the US fell steeply in the final quarter of 2025 after the Trump administration withdrew a $7,500 consumer tax credit, while the government is also seeking to roll back regulations aimed at curbing car emissions. GM’s EV sales declined by 43 per cent between the third and fourth quarter.

“With the termination of certain consumer tax incentives and the reduction in the stringency of emissions regulations, industry-wide consumer demand for EVs in North America began to slow in 2025,” the company said in its filing. “As a result, GM proactively reduced EV capacity.”

It added that “we expect to recognise additional material cash and non-cash charges in 2026 related to continued commercial negotiations with our supply base, which we believe will be significantly less than the EV-related charges incurred in 2025”.

GM, which produces the Chevrolet, GMC, Buick and Cadillac brands, said in November 2022 that it expected to have a “solidly profitable” EV business producing 1mn units a year by 2025. Instead, it sold 169,887 EVs in the US last year.

At the end of 2024, it sold its stake in a plant in Lansing, Michigan, that was set to produce EV batteries as part of a joint venture with Korean cell maker LG Energy Solution. It has also reversed plans to convert plants in Lansing and Toledo, Ohio, into production facilities for electric vehicles.

The company said in October last year that it would incur $1.6bn in costs to scale back its EV production and that it expected to report further charges.

It is also bringing back its low-cost Chevy Bolt, whose battery will be supplied by Chinese giant CATL despite steep US tariffs on Chinese imports.

GM’s latest EV-related service charge came after Detroit rival Ford reported a $19.5bn writedown as it scrapped its flagship F-150 all-electric pick-up truck and other large EVs to focus more on profitable hybrids and combustion-engine models.

Ford, which announced last month that it was working on a new platform for smaller EVs, sold 84,113 fully electric vehicles in the US in 2025, less than half of GM’s total. Unlike Ford, GM does not break down its financial results by business divisions, meaning it does not report specific EV-related losses.

GM reported this week a 6 per cent increase in total US car sales between 2024 and 2025, retaining its crown as the best-selling auto group in the US with sales of 2.85mn units.

FT : UAE cuts funds for citizens keen to study in UK over Muslim Brotherhood ten

UAE cuts funds for citizens keen to study in UK over Muslim Brotherhood tensions
Emirates’ fear of Islamist radicalisation weighs on exclusion of British universities from scholarships

The United Arab Emirates has restricted funding for its citizens who want to study at British universities, the latest sign of tensions over the UK’s decision not to proscribe the Islamist Muslim Brotherhood group.

Abu Dhabi’s decision to exclude UK institutions from a list of universities eligible for state scholarships comes as relations between the two historic allies have frayed in recent years.

In June, the UAE higher education ministry published a list of global universities for which scholarships would be approved and qualifications certified, as part of reforms that limited funding to the best-performing institutions.

The list included universities in countries including the US, Australia, Israel and France, but not the UK, which is home to many of the world’s top academic institutions.

The exclusion of British universities is linked to anxiety in the UAE over what it sees as the risk of Islamist radicalisation on UK campuses, according to three people familiar with the matter.


When UK officials queried the absence of British institutions on the June list, UAE officials said the omission had not been an “oversight”, according to a person with direct knowledge of the discussions.

“[The UAE] don’t want their kids to be radicalised on campus,” the person added.

In response, UK officials underscored the importance of academic freedom, the person said.

In 2023-24, 70 students at UK universities — out of an overall higher education student population of almost 3mn — were reported for possible referral to the government’s Prevent deradicalisation programme showing signs of “Islamist radicalisation”, nearly double the previous year.

Since the 2011 popular Arab uprisings, the UAE has imposed a harsh clampdown on domestic Islamist activity and intervened regionally in a bid to limit the role of political Islam.

Under UAE President Sheikh Mohammed bin Zayed al-Nahyan, Abu Dhabi has also for years questioned the UK’s decision not to proscribe the Muslim Brotherhood. Prime Minister Sir Keir Starmer’s administration last year said the matter is under “close review”.

A comprehensive UK government review into the Muslim Brotherhood in 2015 said the group had not been linked to terrorist-related activity in and against Britain.

Nigel Farage, whose rightwing populist Reform UK party leads in British polls, has vowed to ban the Muslim Brotherhood if he becomes prime minister. The UAE government paid for Farage to visit the country last year, the FT reported this week.

One UK-based academic downplayed UAE concerns about the extent of any Islamist activity within UK universities, but they acknowledged that the Israel-Gaza war had “a destabilising impact” on British campuses.

A student protest to support the Palestinian people at Cambridge university © Henry Nicholls/AFP/Getty Images
The UK has been a popular destination for Emiratis, who enjoy generous scholarships from their government to study internationally.

Federal funding for Emiratis wanting to begin studying in the UK was already being denied before June as bilateral tensions have grown, according to people familiar with the matter. One said students who had already begun courses continued to receive funding.

In the year ending September 2025 there were 213 students from the UAE granted visas to study at UK universities, a decline of 27 per cent from a year earlier and a 55 per cent drop from the year ending September 2022.

The exclusion of UK universities by the UAE is the latest fracture in the countries’ relationship. It follows disagreements over an Abu Dhabi-backed attempt to purchase The Daily Telegraph newspaper in November 2023, the UAE’s alleged backing of paramilitary forces in Sudan — which it denies — and the English Premier League’s case against Emirati-owned football club Manchester City over its finances.

UK officials said it was unclear how total the ban on scholarships was in practice, saying they were aware of cases of some UAE military personnel still getting scholarships. Some wealthier Emiratis have continued to send their children to study in the UK, paying the fees directly.

But the UAE has also said it would not recognise qualifications from academic institutions that are not on the accredited list, meaning degrees from UK universities have less value for Emiratis.

A UAE official declined to comment on the apparent exclusion, saying the bilateral relationship remained strong.

The row has come despite the UAE being an increasingly popular location for UK universities to open campuses, with Dubai sites for leading institutions including the University of Manchester and Heriot-Watt University in Edinburgh.

The UAE foreign ministry did not immediately respond to a request for comment. The UK education department did not immediately comment.

>>> US After Hours Summary: GM -2% expects $6 bln EV charge; AXTI -28.5%, PCRX -

After Hours Summary: GM -2% expects $6 bln EV charge; AXTI -28.5%, PCRX -9.7%, WDFC -9.1% lower on earnings/guidance; KALV +13.8% provides update on EKTERLY launch; Trump wants govt to purchase $200 bln in mortgage bonds

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: TLRY +6.7%, ADCT +2%, GBX +0.1%

Companies trading higher in after hours in reaction to news: KALV +13.8% (provides update on EKTERLY launch), RKT +7% (Trump comments about mortgage bonds), FRO +2.7% (announces a strategic fleet renewal initiative), JBI +2.6% (aquires Kiwi II Construction), TTAM +2.5% (to acquire Keystone Cement), QTRX +2.3% (names new CEO, also expects to exceed revenue and cash guidance for FY25), KRYS +2.1% (clinical update from KB407 Phase 1 CORAL-1 study), INTC +1.9% (President Trump said he had a great meeting with CEO in Truth Social post), NWPX +1.6% (first commercial use of its Permalok Radial Bending Joint), EBS +1.3% (receives $21.5 mln order from Dept of War in 2026), GWRE +0.8% (authorizes new $500 mln share repurchase program), PSTL +0.5% (provides Q4 update on activity), SENS +0.4% (first commerical patients using Eversense 365 CGM), RIO +0.4% (confirms engaging in discussions with Glencore about a possible combination), GE +0.3% (awarded a $1.4 bln modification to Navy contract), LLY +0.2% (orforglipron helped people maintain weight loss; provides update from oral GLP-1 Phase 3 trial), STAG +0.2% (increases dividend), ILMN +0.2% (names new CMO), NDAQ +0.2% (December 2025 volumes), ARMN +0.1% (updates Segovia estimates)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: AXTI -28.5%, BBNX -15.6%, PCRX -9.7%, WDFC -9.1%, OLN -7.8%, AEHR -7%

Companies trading lower in after hours in reaction to news: FLYX -9.9% (stock offering), GM -2% (expects $6 bln charge in Q4 related to reducing EV production and impairments), MRK -0.3% (issues statement on new immunization schedule), VRSK -0.1% (sells Verisk Marketing Solutions)

FT : Glencore and Rio Tinto resume talks on $260bn mining megadeal

Glencore and Rio Tinto resume talks on $260bn mining megadeal
Discussions over a tie-up to create the world’s largest mining group come as race to secure copper reshapes the sector

Glencore and Rio Tinto have restarted talks over a potential megamerger to create the world’s largest mining company, nearly a year after previous deal discussions between the global miners collapsed.

The potential deal would create a mining behemoth with an enterprise value of more than $260bn, at a time when the race for copper is reshaping the sector.

The two groups on Thursday separately confirmed they were in “preliminary discussions” about a “possible combination of some or all of their businesses, which could include an all-share merger between Rio Tinto and Glencore”.

The statements, published shortly after the FT revealed the talks, also noted there was no certainty any transaction would be agreed.

Rio Tinto — the larger of the two companies with an enterprise value of $162bn — would potentially acquire Glencore under the deal currently envisaged, they said.

Rio Tinto’s Australian-listed shares opened sharply lower on Friday after the company confirmed its talks with Glencore. The stock was trading down 4.5 per cent on the Australian Securities Exchange.

The recent combination of Anglo American and Canada’s Teck Resources — a friendly deal done at zero premium — has put pressure on rivals such as BHP and Rio Tinto to bulk up as miners vie to secure access to more copper resources.

Copper prices this week hit an all-time high of more than $13,300 per tonne, underscoring a market shortfall that analysts warn could reach 10mn tonnes by 2040.

A full combination of Rio Tinto and Glencore was one of the options under discussion, said people familiar with the matter, although the exact contours of a potential deal could not be determined. The talks restarted late last year, the people said.

It is unclear whether Glencore’s extensive trading operations would be included in any merger.

Switzerland-based Glencore has recently rebranded itself as a copper growth company, with chief executive Gary Nagle in December saying it would become the “biggest copper producer in the world”.

The company is the world’s sixth-largest copper producer and largest listed coal producer. Its expansion plans, which include developing a new copper mine, El Pachón, in Argentina, would lead to it producing 1.6mn tonnes of copper annually by 2035, roughly double current levels.

The pair previously held deal talks in late 2024, but these ended over issues including valuation, the chief executive and the future of Glencore’s coal mines.

Since those talks ended, Rio Tinto has appointed a new chief executive, Simon Trott, who took over in August. He has focused on cost-cutting and streamlining, and has put several assets including the company’s large boron mine in California under strategic review.

Meanwhile, Glencore has restructured its coal holdings into a separate Australia-based entity, a change it confirmed in May. Analysts said the new structure would make it easier to spin out the coal mines into a separate company, an option that the group examined last year.

Rio Tinto left the coal business years ago, selling its last mine in 2018. Analysts believe it may be reluctant to get involved with coal again.

Glencore’s share price has risen 35 per cent over the past six months, buoyed by rising commodity prices and its new copper strategy. Rio Tinto’s stock has gained 41 per cent over the same period.

Nagle in December said the mining industry lacked scale and relevance because of the size of its companies. “It makes sense to create bigger companies,” he said. “Not just for the sake of size, but also to create material synergies, to create relevance, to attract talent, to attract capital.”

Under UK takeover code rules, Rio Tinto has until February 5 to either make an offer for Glencore or state that it does not intend to do so.

FT : Merck in talks to buy cancer drugmaker Revolution Medicines for up to $32bn

Merck in talks to buy cancer drugmaker Revolution Medicines for up to $32bn
US company is attempting to acquire the maker of a new treatment for pancreatic cancer

US pharmaceutical group Merck is in talks to buy Revolution Medicines, a cancer drugmaker with a market capitalisation of more than $20bn in what would be the latest big deal in the red-hot biotechnology sector.

Merck has not finalised a deal for the Redwood City, California-based biotech, said people familiar with the matter. A tie-up would be at least several weeks away, they added.

A price tag of $28bn to $32bn was being discussed as part of negotiations, one of the people said. That would mark the biggest healthcare deal in at least two years since Pfizer’s $43bn takeover of cancer biotech Seagen.

Other large pharmaceutical groups were circling Revolution Medicines and another suitor might prevail, the people added. A transaction is not a foregone conclusion.

Shares in Revolution Medicines rose 4.6 per cent during Thursday’s trading session, after the FT’s report. They rallied another 15 per cent in extended trading, giving the company a market value of $24bn.

Merck did not immediately respond to requests for comment. Revolution Medicines declined to comment.

The challenge of looming patent cliffs has triggered a wave of biotech deals by large pharma groups in recent months, driving total deal volumes to $135bn last year, more than double 2024 levels, according to S&P Capital IQ data.

Revolution Medicines is running early-stage trials for a new targeted therapy that stalls tumour growth in the most common type of pancreatic cancer, one of the deadliest forms of the disease that has scant treatment options.

The biotech is also trialling its drug, which works by inhibiting a gene mutation, for patients with non-small cell lung cancer. Revolution Medicines’ share price has more than doubled over the past year.

The group is awaiting vital data and approvals needed to sell its drugs, which are unlikely to reach market until the end of the year at the earliest, analysts say. That means the potential tie-up Merck is considering would be the biggest pre-commercial biotech deal.

Merck has been on a buying spree to fill an impending revenue hole when blockbuster cancer treatment Keytruda begins to lose patent protection in 2028. Last year, it struck a $10bn deal for respiratory drugmaker Verona Pharma and acquired flu prevention biotech Cidara Therapeutics for $9.2bn.

FT : Hedge funds’ credit-default spat

Hedge funds’ credit-default spat

In the world of credit default swaps, buyers and sellers usually prefer to keep quiet about their positions.

But the $10bn restructuring of the Luxembourg-based Ardagh Group has led to a rare public spat over the opaque derivatives, pitting London-based Arini Capital Management against rival funds.

The restructuring has also exposed Arini — which was one of Ardagh’s biggest bondholders — as having positions on multiple sides of Ardagh’s finances.

Arini was founded by former Credit Suisse star Hamza Lemssouguer in 2021. It’s grown rapidly and today manages more than $11bn in assets.

The fund has sold large amounts of Ardagh CDS, putting it at the centre of this week’s debate over how much buyers of the derivatives will be paid out.

The agreement to restructure Ardagh, one of the world’s biggest producers of glass and metal drinks containers, triggered the CDS contracts.

But it gets messy because the instruments don’t simply pay out a fixed amount. Instead, an auction of defaulted bonds is held, with CDS holders getting the difference between the amount the bonds fetch at auction and their face value.

Arini has argued that certain lower-ranking Ardagh bonds shouldn’t be included in that process. And it’s not hard to see why: Arini would face higher payouts on the CDS it sold if the lower-ranking bonds were included, according to several people familiar with the matter.

The fund said that including Ardagh’s unsecured bonds — which have since converted to equity — “would turn them into Schrödinger’s Obligations”, where they were both equity and debt at the same time.

London-based Tresidor Investment Management and New York-based Laurion Capital Management this week hit back, filing responses challenging Arini’s position.

Tresidor argued that it contains “multiple logical non-sequiturs”. Laurion’s lawyers from Milbank described Arini’s arguments as “incorrect and unworkably muddy”.

CDS is having a bit of a moment, especially to hedge against AI risks. So the resolution here could be critical to investors wondering what to expect in the way of payouts.

“This is about having a market that actually works,” said one credit investor with exposure to Ardagh’s CDS. “The product is there to insure people.”