Brian Chappatta, Columnist

When a Ponzi Scheme and Bond Protections Collide

The saga of a Florida real-estate district calls into question the power of some debt covenants.

June 12, 2019 at 11:00 AM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Grand Venezia condominium community in Clearwater, Florida. What do borrowers owe when they have been scammed? — Grand Venezia condominium community in Clearwater, Florida. What do borrowers owe when they have been scammed?
Photographer: Google

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Imagine the following chain of events:

This is what Donald Dwyer is fighting against. As Bloomberg News’s Amanda Albright reported, the former Maryland lawmaker is fed up with the situation and has launched headfirst into a crusade against the outstanding debt. He rose up to become the chairman of the district’s board of supervisors, and earlier this month took the drastic step of filing for Chapter 9 bankruptcy protection.