Mayer Brown's Sean Scott on the lender side of LMTs
Mar 26, 2024
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Sean Scott, a senior lawyer at Mayer Brown, discusses liability management transactions, including tactics like Serta defenses and cooperation agreements. He explores the growth potential of LMTs in the next five years, the impact of reduced cooperation agreements on debtors, and strategies to mitigate risks in lending transactions.
LMTs safeguard lenders through structured deals and documentary protections.
Rising prevalence of LMTs requires balancing collaborative practices and protective measures for lenders.
Deep dives
Overview of Sean Scott's Background and Practice at Mayor Brown
Sean Scott, a partner at Mayor Brown, leads the restructuring team focusing on complex insolvency matters. Notably, his recent representations include Regions Bank and Epic's Chapter 11 cases. Scott's interest in bankruptcy stemmed from studying political science and boarding systems. His choice of law over a potential academic path led him to Mayor Brown's collaborative and strong academic culture, where he found mentors and specialized in financial institution matters.
Importance of Structuring Deals and Protecting Lenders
Scott emphasizes the significance of structuring deals to ring fence risks and shield lenders through legal and documentary structures. Mayor Brown's structured finance practice focuses on isolating assets from bankruptcy risks, akin to Liability Management Transactions (LMTs). Scott's work on transactions like Goldman's mileage plus program demonstrates protecting lenders while providing financing to borrowers during challenging times.
Trend in Liability Management Transactions and Lender Response
Scott predicts the continued prevalence of LMTs due to opportunistic market participants and rising bankruptcy costs. With more lenders engaging in liability management transactions, the challenge lies in balancing inclusive approaches to avoid litigation and protective measures for excluded lenders. Proactive documentary protections, cooperation agreements among lenders, and market trends indicate a shift towards more collaborative and protective approaches in handling LMTs to mitigate risks for lenders.
On this month's Legal Lens, host Andy Serbe sits down with Mayer Brown's Sean Scott, to discuss the hot topic of liability management transactions, covering the lender-side response to the popular tactics ranging from so-called Serta defenses to cooperation agreements.
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