FICC Focus State of Distressed Debt: Davis Polk’s Resnick on Emerging LME Trends
11 snips
Mar 20, 2026 Brian Resnick, restructuring partner who leads Davis Polk’s Liability Management & Special Opportunities practice, discusses evolving liability management strategies. He breaks down one-shot deleveragings versus repeat LMEs. He explores private credit vs bank-sponsored loan dynamics, anti-cooperation language risks, and sophisticated disqualified lender provisions.
AI Snips
Chapters
Transcript
Episode notes
Deal-Away Threats Drive Many Liability Management Exercises
- Deal-away threats like sponsor drop-downs shape many LMEs by pressuring term lenders to provide new capital, discounts, or maturity extensions.
- The key determinant is whether the transaction delivers enough deleveraging and runway to avoid future restructurings.
One-Shot Deleveraging Is Gaining Consideration
- Market discussion is shifting toward doing more aggressive, one-shot deleveragings during LMEs to avoid a two-step LME-then-restructure outcome.
- Many LMEs historically lacked sufficient write-downs or time, causing companies to hit a wall later.
Pluralsight Example Of Sponsor Drop-Down In Private Credit
- Pluralsight was a notable private-credit example where a sponsor-financed drop-down paid lender interest and ended as a hand-over-the-keys outcome.
- That case was an exception given a large lending syndicate; most private credit deals stay relationship-driven and consensual.