FICC Focus State of Distressed Debt: Latham's Sobolewski on Debtor Playbook
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Dec 16, 2025 In this discussion, John Sobolewski, Partner and Global Chair of Latham & Watkins' Liability Management Practice, shares his insights on the evolution of liability management since 2020. He critiques co-ops as potentially unnecessary and praises the benefits of competition among creditors. Sobolewski emphasizes the importance of early engagement in restructurings and the strategic use of multiple refinancing channels. He also explores jurisdictional dynamics and the impact of recent appellate rulings on deal design, pointing towards a more competitive future in distressed debt management.
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LMEs Have Matured, Not Reborn
- Liability management has matured since 2020 into a more deal-focused, less litigation-prone era.
- Companies now pursue incremental tweaks and runway extensions rather than aggressive discount-driven plays.
Hire Bankruptcy Counsel Early
- If bankruptcy is plausible, engage top-tier bankruptcy counsel early rather than at the last minute.
- Prepare strategy and governance in advance to avoid reactive, costly decisions during distress.
LMEs Can Succeed Without Bankruptcy
- Many LMEs are stepping stones for already-sick companies, but a meaningful minority succeed without filing.
- Lumen is cited as an example that used runway extension to ultimately thrive post-LME.