In-Court Liability Management Transactions: The Serta Effect in Chapter 11 Financing

This CLE webinar will cover the fundamentals of liability management transactions (LMTs); the use of LMTs in Chapter 11 financing through "non-pro rata" debtor-in-possession roll-ups; "sacred rights" and how they operate; strategies for addressing pre-petition lenders; and the latest LMT developments from the American Tire, ConvergeOne, Anthology, and Del Monte decisions. The faculty will also share practical documentation tips practitioners should consider when negotiating deals.

Businesses in financial distress have made widespread use of LMTs with all of their variations, notwithstanding that the data shows such transactions generally fail to avoid defaults or bankruptcy, and notwithstanding the litigation expenses, or even an adverse judgment as seen in the recent Serta decision from the Bankruptcy Court in the Southern District of Texas.

While the market may yet see a return to more traditional (and inclusive) restructuring transactions, particularly as lenders continue to push back on terms in credit documents in order to preserve the senior secured position in the capital structure that was the basis for their loans in the first place, the issues around LMTs have found their way into the realm of Chapter 11 financings in the form of "non-pro rata" debtor-in-possession "roll ups." There have been a series of cases, most conspicuously starting with American Tire and through ConvergeOne, Anthology, and Del Monte, where syndicates of pre-petition lenders have confronted the impact of pre-petition documents on the ability to finance the Chapter 11 debtor.

The program will look at these cases involving in-court LMTs to see how the strategies of putting together a syndicated Chapter 11 facility are impacted by these cases and what lenders should be considering in their documentation to navigate through the Chapter 11 financing process.

Listen as our authoritative panel examines the inter-lender issues surrounding LMTs in the sharp focus of a Chapter 11 proceeding. After attending, counsel and their lender clients will fully understand these complicated dynamics and more.