Its Global Opportunity Fund has returned 13.5% annually since 1999, and its Distressed Debt Fund has returned 7.3% since 2004.

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"The best way to defend their position in the private-equity space is to affiliate with a distressed-debt fund, " Bringewatt says.

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Mr. Singer's fund specializes in distressed debt and bankruptcy situations, so perhaps he has reason to oppose changes to a system he knows so well.

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By having a dedicated fund to invest in distressed debt, they have a better flow of information to see where the investment opportunities lurk.

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There may be signs of distress among distressed debt investors, driven by a lack of opportunities as fund managers scramble for new investment choices.

FORBES: Dunking Distressed Debt

Gudefin's hedge fund background helps explain two of her other specialties at Discovery: merger arbitrage and distressed-debt investing.

FORBES: Money & Investing