Davis Polk partner and Liability Management & Special Opportunities practice head Brian Resnick was quoted in Bloomberg Law discussing the rise in cooperation agreements among lenders of distressed private-equity backed companies following a surge in liability management transactions.

Brian said that now lenders know that if there’s room in a credit agreement for additional financing and re-positioning of priorities, it could very well happen, noting that defensive action is “the first thing that gets talked about.”

“The signing of a co-op is the way to solidify your group,” he said.

There are lenders who tend to be more aggressive and try to form a group with just 51%, while in other cases nearly all of the debt holders have agreed to work together, Brian continued. “You have opportunistic funds and you have defensive funds,” he said. “There’s a lot of money for investors to make if they play these right, and a lot to lose if they don’t.”

“Distressed Company Lenders Look to Cooperate to Avoid ‘Violence’,” Bloomberg Law (October 11, 2024)

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