In the News
Lenders Seek to Avoid Creditor Violence
February 1, 2024
Authors
Timothy John Carter
Director, Boston
tcarter@goulstonstorrs.com+1 617 574 3561
Pamela M. MacKenzie
Director, Boston
pmackenzie@goulstonstorrs.com+1 617 574 4106
James F. Wallack
Of Counsel, Boston
jwallack@goulstonstorrs.com+1 617 574 4107Source
The Wall Street Journal
As U.S. businesses face ongoing economic headwinds, commercial lenders are acting more aggressively to reduce their exposure to rogue actions by co-lenders. In a number of transactions over the last several years, lenders have broken with their lending syndicates to cut self-serving restructuring deals with struggling companies at the expense of the rest of their fellow lenders. To prevent this “creditor-on-creditor violence,” lenders are increasingly entering into cooperation agreements earlier in the financial restructuring process—seeking to create a unified front among their lender groups at the first signs of borrower distress. Lenders believe these proactive efforts will reduce the risk of rogue actions by a subset of their lending syndicate and prevent the value-destructive disputes that they generate.
“Creditor-on-creditor violence” is on the rise. How are lenders attempting to navigate distress and avoid disputes? Tim Carter, Pam MacKenzie, and Jim Wallack discuss the growing use of cooperation agreements in The Wall Street Journal.
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