Moulton the Mouth is at it again, warning about the legal and ethical risks of buy-out groups acquiring the debt of companies whose equity they own. Pick a metaphor: Jon Moulton is the black sheep of the private equity flock, a thorn in the side of his buy-out peers, a man throwing stones inside his own glass house (his £300m credit fund, Alchemy Special Opportunities) or all of the above. He is also right.

The trend towards private equity companies buying at a discount the debt of companies they took private is (probably) not illegal. It may even be beneficial for the portfolio company if the alternative is a fire-sale of debt to hostile hedge funds. But the buy-out firms that do it make a virtue of the fact that they use knowledge attained as bidders or shareholders to assess the true value of the debt. That is presumably knowledge to which other creditors, or potential creditors, are not privy.