Leveraging Market Uncertainty in Restructuring Private Equity Investments

While every restructuring situation is different, and the springing debt concept is but one example of a carrot to use in negotiations with creditors, it is illustrative of the dynamics currently in play in the world of COVID-19: companies, boards of directors, and sponsors have significant leverage in negotiations with creditors, but “it takes two to tango.”

Leveraging Market Uncertainty in Restructuring Private Equity Investments

There is necessarily a tension that exists in any financial restructuring, and this is particularly so in the current environment considering that:

1. Creditors want both to (a) avoid an immediate write-down, particularly if they believe the business may rebound in the…