Davis Polk partner and Restructuring practice co-head Damian Schaible discussed the impact of private credit on the broadly syndicated loan market with the American Lawyer. 

“Private credit has been effectively eating the lunch of the broadly syndicated loan market for the past few years,” Damian noted. “We went from a handful of firms focused on smaller financings and financings that didn’t fit cleanly into the predominant market to a world where seemingly every firm has a private credit platform and is raising significant amounts of money for that mandate.”

While the backdrop of a potential bankruptcy filing serves as leverage to restructure a private credit deal out of court, fewer private credit deals tend to end up in bankruptcy court, Damian explained. “Traditionally, private credit deals have had smaller syndicates and simpler capital structures. Generally, when we’re working on a private credit deal, we are more likely to get something done out of court simply because fewer parties need to agree.”

“There are many more similarities between private credit workouts and broadly syndicated loan workouts than differences,” Damian added. 

“How to Win at Restructuring in the Gilded Age of Private Credit,” American Lawyer (August 19, 2024) (subscription required) 

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