Current State Liability Management Transactions | FTI Consulting

The Race to 50.1% - The Current State of Liability Management Transactions

Corporate Finance & Restructuring | Private Debt Investor, November 2, 2020 (Reprint)

November 2, 2020

In "The Race to 50.1% - The Current State of Liability Management Transactions" published in Private Debt Investor, FTI Consulting's Senior Managing Director, Sanjeev Khemlani along with Mark Liscio, Partner, Freshfield Bruckhaus Deringer and Bryan High, Managing Director and Co-Portfolio Manager for Special Situations, Barings LLC discuss the impact that the rise in pandemic-related distress is having on highly levered companies, restructuring advisors and opportunistic lenders.

This is an extract from Private Debt Investor, first published November 2, 2020. The whole publication is available at

"The recent spate of high-profile liability management transactions where existing lenders provide liquidity to distressed borrowers through the creation of priority tranches of debt are not new financing structures, but they have moved into new territory by being proposed and consummated on a non-pro-rata basis, e.g., the recent Serta, Travelport, Tri-Mark, and Boardriders priority financings.

The rise in pandemic-related distress on highly levered companies has led issuers, restructuring advisors and opportunistic existing lenders to develop and consummate transactions that benefit both the issuer and the new capital provider – the company receives much needed liquidity and the new money lenders get favorable terms, such as priority liens and/or claims and enhanced treatment for their existing debt (e.g., a favorable exchange of some or all of their existing debt at a premium to existing debt trading levels). The nature of the priority facility and the favorable exchanges often has the potential to provide the participating lenders with a greater overall return on their original debt than non-participating lenders."

Posted with permission from the Private Debt Investor. Copyright 2020 Private Debt Investor.

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