The Wall Street Journal’s Money & Investing section had an article yesterday (10/17/2006) entitled Debt Buyers v. The Indebted: Showdown Between Hedge Funds and Private Equity May be Inevitable. The article highlighted the tension between private-equity firms, who borrow money from wealthy individuals and large institutions, to buy distressed companies, and hedge funds, who borrow money from wealthy individuals and large institutions, to buy the debt of distressed companies. Apparently, the private equity companies are alarmed at the increasingly aggressive role that hedge funds are playing in workout negotiations and in bankruptcy cases such as Tower Automotive, in which a hedge fund steered the creditors’ committee.  According to the article, some private equity firms are trying to prevent certain notoriously tough hedge funds from getting ahold of debt in the companies that they own–a difficult task given the lively market for debt. The article predicts that if the economy tanks, and interest rates climb sharply, the Chapter 11 will be the stage upon which the duel between private-equity firms and hedge funds takes place.