Australian lenders are taking a more positive view of secondary debt traders and are more inclined to deal with them than in the past, according to an adviser in the field.A partner in the restructuring and insolvency group at the law firm Ashurst, Tim Sackar, said he was advising a growing number of lenders on the ins and outs of dealing with hedge funds and other secondary debt buyers.Sackar, who was speaking at a Finsia seminar on insolvency in Sydney yesterday, said: "Hedge funds can create problems but on the positive side they create liquidity and they give lenders options."Secondary debt trading activity picked up in Australia during the financial crisis and has continued to develop. Hedge funds have been involved in the debt purchasing and restructuring of a number of companies, including retailers Godfreys, Colorado and Red Group (Borders), as well as Centro and Alinta.A number of investment banks are involved in arranging deals, and hedge funds that have been active include King Street Capital, Apollo Global Management, Varde Partners, Oaktree Capital Management and Angelo Gordon & Co.Sackar said: "Hedge funds get involved when a company is having difficulty refinancing, where there is an insolvency or capital restructure, or where there are issues with the value of the security."From a bank's point of view hedge funds can cause problems when they have different goals to lenders. For example, they might want to convert debt to equity."Another speaker at the seminar, National Australia Bank head of group strategic business services Tim Williams, said there was plenty of discussion among the banks about the role of secondary debt traders."What you want is to be able to stabilise a situation. Centro ended up having 80 banks involved over time. Rivercity Motorway in Brisbane has 22. It can be difficult to organise groups that size. Being about to use a secondary buyer as an exit is an option in those situations."From our point of view secondary debt trading is another tool," Williams said.