Cloud 9fin Snooze/lose hits different in America
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Jan 29, 2026 David Hahn, a Davis Polk partner who advises lenders on syndicated and private credit and restructurings, breaks down snooze/lose clauses and their rise from Europe to the U.S. He explains how they change voting mechanics and lender risks. He covers different clause formulations, tracking burdens for lenders, and complications for CLOs and private credit.
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Silence Is No Longer Neutral
- Snooze/lose flips the default voting mechanic by penalizing silence and can treat non-responses as votes or remove them from the denominator.
- That change fundamentally alters lenders' expectations about passivity in amendment votes.
Why Borrowers Want It, Lenders Fear It
- Borrowers gain practical benefits like avoiding small early-maturing stubs and solving audit going-concern issues by securing more complete votes.
- Lenders, especially smaller ones, lose the ability to stay silent and be passively represented by larger holders.
Europe Precedent Meets U.S. Fragmentation
- Europe adopted snooze/lose earlier and institutional pockets differ across regions, so U.S. investors lack uniform familiarity.
- That uneven experience means adoption outcomes vary by investor governance and geography.