Knives out: court cases cleave apart creditor expectations

Diverging court rulings show pitfalls and potential of challenging controversial restructuring transactions

As ailing US corporates have struggled to service post-crisis loans, the prevalence of cov-lite lending has helped let creditors carve up distressed debt and sometimes cut other lenders out of the picture.

And as the fragility of some of the weakest companies has grown, so has the creative guile among lenders seeking to minimise their losses and refinance.

Liability management exercises (LMEs) have become an increasingly popular means for distressed lenders to raise new cash – and for the craftier