This chapter discusses the dilution of certain provisions in credit agreements, specifically focusing on Material IP Transfer Prohibitions and how they have been bypassed through triangulation and permitted investments. It uses the case of J.K.R.U. to illustrate the risks involved in transferring assets to unrestricted subsidiaries, where lenders lose their claims on the transferred assets.
Featured this week: Purdue, PBF Energy, SmileDirectClub and Puerto Rico.
And deep dive, Peter Washkowitz and Julian Bulaon, from our America’s Covenants team, join David Zubkis to discuss the continuing erosion of lender protections in credit agreements including voting protections, most-favored-nation rights, IP transfer prohibitions and restrictions on raising structurally senior debt.
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