Cloud 9fin The ABCs of private credit LMEs, with Freshfields
7 snips
Jun 7, 2024 The podcast delves into 'lender-on-lender violence' in private credit, discussing how companies, sponsors, and lenders navigate liability management. Legal experts explore the evolving market dynamics, the impact of debt restructurings, and the importance of aligning incentives in private credit transactions. The episode highlights the complexity of the private credit market, including the influence of opportunistic funds, evolving lender protections, and the emergence of bespoke solutions tailored to companies' unique challenges.
AI Snips
Chapters
Transcript
Episode notes
LME Origins
- The rise of liability management exercises (LMEs) stems from disruptions like the J. Crew case and evolving market dynamics.
- Increased opportunistic funds in broadly syndicated loans and sponsor involvement in private credit changed the landscape.
Lender Protection
- Lenders should secure updated protections, focusing on "sacred rights" in credit agreements to ensure equal treatment.
- Consider J. Crew, Serta, and Core cases when drafting documents, emphasizing comprehensive solutions.
Private Credit vs. BSL
- Private credit deals differ from BSL deals, allowing bespoke lender relationships and more flexibility for minority lender control.
- This includes consent rights over modifications, dilution protection via incremental Rofos, and mirroring Unitranche AAL features.