The LFI Levered Lines Podcast Documentation to Distress: LMT Insights with Anchorage Capital's Kim
Nov 12, 2025
Soo Kim, Partner at Anchorage Capital Advisors, leads global performing credit and CLOs with deep distressed credit experience. She explains how modern liability management transactions differ from past defaults. Short, sharp takes cover LMT structures, the role of documentation and voting thresholds, who benefits or loses, and timing strategies for preserving value.
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LMTs Are Premeditated Liquidity Tools
- Liability management transactions (LMTs) are premeditated defaults designed to provide liquidity and deleveraging rather than payment-driven failures.
- Soo Kim ties LMTs to 2021-22's low rates, huge LBO activity and then rapid rate hikes that left over-levered balance sheets.
LMTs Combine New Money With Deleveraging
- LMTs aim to both provide near-term funding and deleverage the capital structure, often by creating new senior claims or exchanging into different instruments.
- Soo Kim explains sponsors use loose documentation to coerce discounts and optionality capture while minimizing litigation risk.
Check Voting Terms And Leakage Baskets
- Study loan documentation holistically to spot non-market features and coercive leakage baskets before investing.
- Pay special attention to voting thresholds and the affected-lender definition because small lenders can punch above their weight with blocking rights.