FICC Focus Gibson Dunn’s Greenberg Unpacks Co-Ops: State of Distressed Debt
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May 16, 2025 
Scott Greenberg, global chair of Gibson Dunn's Business Restructuring and Reorganization Practice Group, dives into the maze of distressed debt and lender cooperation agreements. He discusses the ongoing cat-and-mouse game between sponsors and lenders, revealing how non-disclosure and anti-cooperation tricks influence negotiations. Greenberg emphasizes the importance of timing in organizing lenders and explores the cultural differences affecting lender dynamics in Europe versus the U.S. His insights shed light on what constitutes success in liability management.
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Larger vs Smaller Lenders' Stakes
- Larger lenders tend to have less downside risk and must often participate in deals.
- Smaller lenders' participation depends on deal specifics and sponsor behavior.
How Co-Ops Form
- Large lenders typically initiate cooperation groups after spotting credit risks and analyzing documents.
- Gradually, other significant lenders join to form a working group.
Narrowing Participation Spreads
- Participation spreads in co-ops have generally narrowed, promoting more inclusive creditor involvement.
- High participation reduces litigation risk and creates more effective liability management.