Wilmington Trust’s Post

I was quoted in a Bloomberg article published today on the "New Rules of Debt" and "What the Covenant Wars Could Cost the Market". #LMEs #NonProRataLMEs #DoubleDIPFinancing #DropDownFinancing #UptierFinancing "“For lenders, the assessment of risk related to traditional credit metrics — like liquidity and debt service coverage ratio — is often taking a back seat to the risk posed by capital structure vulnerabilities and the threat of this kind of liability management,” said Michael Handler, a partner in the restructuring practice at law firm King & Spalding. “Lenders fearful of an aggressive transaction may even sell out of loans they otherwise believe are worth holding based on fundamentals.” “On the plus side, companies get access to money that wouldn’t necessarily be available — or would be much more expensive — in any other context,” he said. “On the downside, by complicating capital structures and potentially angering left-out creditors, they narrow the companies’ future options when it comes to financing.” https://lnkd.in/d9jQa-UN

Exploring the world of recourse debt 💼 Just like signing for a primary residence, it means taking on personal responsibility on commercial properties. In this case, all partners, including the initial GPs, are fully committed as guarantors. It's a strategic choice between recourse and non-recourse debt, with implications for terms and risk. Despite the potential downsides, belief in this deal's strength led to the decision to recourse debt, maximizing its potential. 💪🏠 Dive into informed investing with the Beard at InvestorFreed, delivering valuable insights and actionable advice. #RealEstateInvesting #StrategicMoves #RiskManagement #RecourseDebt #multifamily #syndication #financialliteracy #FinancialFreedom

A private debt manager in New York will pay $1.5 million to settle allegations from the SEC regarding inadequate policies for managing the risk of sensitive information leaks during its restructuring of a foreign company's debt affected by the pandemic. Read the story here to learn more: https://okt.to/q3ZAUC #RCW #regulatoryCompliance #PrivateFunds #PrivateEquity #MNPI

I'm very excited to have co-authored with Jenn Pastarnack and Johanna Colpritt an article titled "Distressed Debt Investors Beware of Disqualified Lender Lists," published in the New York Law Journal. A recent development seen in some credit agreements is that they contain new provisions that expressly preclude “distressed investors” from holding loans. This article aims to alert readers of such changes to the language in these agreements and the implications of those changes. To read the article: https://lnkd.in/eDHHepCy #WhatsYourNext

It’s a brave new world in credit today. As soon as you witness deteriorating credit metrics, don’t wait to hire workout lawyers who are well versed on ways to defend against covenant "wars" and aggressive "liability management exercises" (LMEs) - the cooperation agreement. It is a pact in which lenders agree to act as a unified group in negotiations with the company. This strategy aims to prevent inter-lender competition that struggling companies exploit to secure new financing in complex restructuring deals. A creditor cooperation agreement prohibits existing lenders from offering new funds to gain priority over their peers in seniority and repayment rank. #Finance #Restructuring #CooperationAgreement

"Lenders to risky, debt-laden companies are increasingly demanding protection from financing manoeuvres used to undercut creditors when times get tough. A recent crop of leveraged loans demonstrates investors’ heightened concern with protecting their assets. In some recent deals, money managers have successfully closed loopholes borrowers might have tried to exploit if higher for longer interest rates overwhelmed their finances. The move is a response to years of controversial financial manoeuvres – once called creditor-on-creditor violence, now more politely called liability management transactions – that leave some lenders out in the cold." - The Straits Times Read more at The Straits Times: https://lnkd.in/gjgMZium Photo: Negative Space #LeveragedLoans #DebtProtection #CreditorRights #FinancialManeuvers #AssetProtection #VietnamLaw

"I was sued by the Capital One bank for a credit card debt I never own. This is the first time I got sued and panicked about it. Even worse, I found out that most firms are only interested in negotiating settlements. Luckily, Fitzgerald & Campbell is willing to take my case and fight against such a big organization. During the process, William talked with me about the procedure, gave instructions, and answered every question in detail. Other staff also responded quickly and guided me through this very long (almost 2 years) process. Truly grateful for your expertise and professional support! The case was concluded with [DISMISSAL WITH PREJUDICE]. Means the Capital One bank did not get a single penny and can never bother me with it again. =========================== Random thoughts: On occasion, I am thinking about the potential outcomes of rejecting the dismissal and proceeding to trial. Then I would like to ask the judge if a dismissal was an appropriate justice for any random person who is unfortunately impacted by the Capital One bank's "not perfect" credit default system. Additionally, I wonder how many people have accepted settlements from the Capital One bank, not because of owing a debt, but to save money and time." K.H. – 07/19/2024 For more testimonials like this visit our website: https://lnkd.in/gDP6tKsU #debt #debtfreejourney #testimonial #reviews #lawfirm

A new year and another up-tiering transaction in the works. Almost every "older" credit agreement or bond indenture drafted in the covenant-light era have holes that savvy borrowers and proactive holders will exploit and the deals themselves price in litigation risk/cost. So if you don't want to find yourself pushed down in the debt-stack, you need to know your documents and rights inside-out and get ahead of the curve. It may not help with outstanding debt but there will always be new agreements and parties scouring them to leverage arbitrage opportunities so there is often as much (if not more) value in talking with your friendly neighborhood restructuring professional at the beginning of a deal than waiting for something to go awry and being forced to play catchup. #distresseddebt #restructuring #bankruptcy #chapter11 #uptiering #lenderonlenderviolence

金融English: Rising interest rates expose flaws in debt covenants During the past decade, investors in credit markets have weakened debt covenants as they competed for higher-yielding deals. Now, borrowers facing a credit squeeze in the face of rising interest rates have found ways to evade those terms. This risks undermining the $3 trillion high-yield bond market and the $1.7 trillion private credit market, fundamentally altering how investors lend to associated companies. "For lenders, the assessment of risk related to traditional credit metrics -- like liquidity and debt service coverage ratio -- is often taking a back seat to the risk posed by capital structure vulnerabilities and the threat of this kind of liability management," says Michael Handler, a partner in the restructuring practice at law firm King & Spalding. Full Story: Bloomberg (9/3) 

Unleash the power of financial freedom with our MCA debt restructuring solution! It's time to reclaim control! 💪💼 #DebtFreedomQuest #RestructureEmpowerment #MoneyMasteryMission