Form 4 Highland Distressed Oppo For: Jun 02 Filed by: HIGHLAND CAPITAL MANAGEMENT LP (10K)

FORM 4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

1. Name and Address of Reporting Person^*

HIGHLAND CAPITAL MANAGEMENT LP

(Last)

(First)

(Middle)

13455 NOEL ROAD, SUITE 800

(Street)

DALLAS

75240

(City)

(State)

(Zip)

2. Issuer Name and Ticker or Trading Symbol
Highland Distressed Opportunities, Inc. [HCD]

5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)

	Director		10% Owner
	Officer (give title below)	X	Other (specify below)
Investment Adviser

3. Date of Earliest Transaction (Month/Day/Year)
06/02/2009

4. If Amendment, Date of Original Filed (Month/Day/Year)

6. Individual or Joint/Group Filing (Check Applicable Line)

	Form filed by One Reporting Person
X	Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)		4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5)			5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4)	6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
			Code	V	Amount	(A) or (D)	Price
Common Shares par value $0.001 per share	06/02/2009		S		131,501	D⁽¹⁾	$ 2.33	864,988.17	I	See Footnotes ⁽²⁾ ⁽³⁾ ⁽⁴⁾ ⁽⁵⁾

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security
(Instr. 3)

2. Conversion or Exercise Price of Derivative Security

3. Transaction Date (Month/Day/Year)

3A. Deemed Execution Date, if any (Month/Day/Year)

4. Transaction Code
(Instr. 8)

5. Number of Derivative Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4, and 5)

6. Date Exercisable and Expiration Date
(Month/Day/Year)

7. Title and Amount of Underlying Securities
(Instr. 3 and 4)

8. Price of Derivative Security
(Instr. 5)

9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 4)

10. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 4)

11. Nature of Indirect Beneficial Ownership
(Instr. 4)

Code

(A)

(D)

Date Exercisable

Expiration Date

Title

Amount or Number of Shares

1. Name and Address of Reporting Person^*

HIGHLAND CAPITAL MANAGEMENT LP

(Last)

(First)

(Middle)

13455 NOEL ROAD, SUITE 800

(Street)

DALLAS

75240

(City)

(State)

(Zip)

1. Name and Address of Reporting Person^*

DONDERO JAMES D

(Last)

(First)

(Middle)

13455 NOEL ROAD, SUITE 800

(Street)

DALLAS

75240

(City)

(State)

(Zip)

Explanation of Responses:
1. Highland Capital Management, L.P. ("Highland Capital") transferred the shares of the issuer (the "Shares") to a participant in Highland Capital's Amended and Restated 2005 HCMLP Option Plan in connection with the exercise by such participant of an option to acquire the Shares which was granted under the Plan
2. This statement is filed by and on behalf of each of the following persons (collectively, the "Reporting Persons"): Highland Capital and James D. Dondero ("Dondero").
3. Mr. Dondero is the President and a director of Strand Advisors, Inc. ("Strand"), the general partner of Highland Capital; he may be deemed to beneficially own shares owned and/or held by and/or for the account of and/or for the benefit of Strand and/or Highland Capital.
4. Each of the Reporting Persons declares that neither the filing of this statement nor anything herein shall be construed as an admission that such person is, for the purposes of Section 13(d) or 13(g) of the Act or any other purpose, the beneficial owner of any securities covered by this statement.
5. Each of the Reporting Persons may be deemed to be a member of a group with respect to the issuer or securities of the issuer for the purposes of Section 13(d) or 13(g) of the Act. Each of the Reporting Persons declares that neither the filing of this statement nor anything herein shall be construed as an admission that such person is, for the purposes of Section 13(d) or 13(g) of the Act or any other purpose, (i) acting (or has agreed or is agreeing to act together with any other person) as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, holding, or disposing of securities of the issuer or otherwise with respect to the issuer or any securities of the issuer or (ii) a member of any group with respect to the issuer or any securities of the issuer.
Remarks: See Exhibit 99.1 Joint Filer Agreement

	Highland Capital Management, L.P. By: Strand Advisors, Inc., its general partner /s/ James D. Dondero	06/04/2009
	James D. Dondero	06/04/2009
	** Signature of Reporting Person	Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 4(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB Number.

EX-99.4_289833

EXHIBIT 99.1
JOINT FILER INFORMATION
OTHER REPORTING PERSON(s)
1. James D. Dondero

ITEM INFORMATION

Name:                              James D. Dondero

Address:                           Two Galleria Tower
                                   13455 Noel Road, Ste. 800
                                   Dallas, Texas 75240

Designated Filer:                  Highland Capital Management, L.P.

Issuer Name and Ticker or          Highland Distressed Opportunities, Inc. [HCD]
Trading Symbol:

Date of Earliest Transaction       June 2, 2009
Required to be Reported
(Month/Day/Year):

If Amendment, Date Original        Not Applicable
Filed (Month/Day/Year):

Relationship of Reporting          10% Owner
Person(s) to Issuer:

Individual or Joint/Group
  Filing:                          Form filed by More than One Reporting Person

Signature:

By:      /s/ James D. Dondero
         --------------------------------
Name:    James D. Dondero
Date:     June 4, 2009

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