Davis Polk partner and Restructuring co-head Damian Schaible was quoted in Bloomberg on the prevalence of debt document loopholes and the impact this could have during a recession. “Loose documents have become the norm rather than the exception,” Damian explained. “If we go into a real recession, we are going to see more and more borrowers and sponsors seeking to exploit document loopholes to create leverage against and among their creditors,” he added.

Damian also noted that currently, “sponsors still have leverage” and “creditors recognize at this point that everyone is on their own.”

“The Debt Deal That Shows How Ugly Things Are Getting for Lenders,” Bloomberg (October 5, 2022) (subscription required)

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