Know More. Risk Better. When Creditors Attack: 2026 Special Situations Outlook
Dec 11, 2025
Mark Lightner, Head of Special Situations Legal Research at CreditSights, specializes in distressed credit and litigation in restructurings. He reviews 2026 outlook themes. Topics include liability management dynamics, rising antitrust challenges to creditor cooperation agreements, and high-stakes mass tort litigation like the Monsanto Roundup case heading to the Supreme Court.
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2025 Returns Favored Higher Quality Within High Yield
- Special situations performance in 2025 was bifurcated: high yield total returns were positive but distressed credits posted losses.
- Outperformance concentrated in double-Bs and select health care and telecom credits with positive event catalysts.
Contracts Decide The Fate Of Liability Management
- Liability management activity in 2025 broadly mirrored 2024 rather than collapsing after the Fifth Circuit Serta decision.
- Market response was contractual: deal outcomes depended on precise language, so parties amended terms rather than abandoning LMTs entirely.
Revise Documentation To Patch Legal Risk
- Expect parties to revise contract language to address legal holes exposed by court decisions.
- Watch deal documentation closely because most Serta-related issues are being solved through tailored contractual drafting.