Andrew Glenn, managing partner and head of Glenn Agre’s bankruptcy and restructuring practice, was recently quoted in Octus on the evolving landscape of liability management exercises (LMEs).
Andrew observed that the market has shifted meaningfully since LMEs first emerged. “When LMEs first started, minority groups were often vulnerable to being exploited,” he noted, but that dynamic has changed. Minority lenders are no longer “asleep at the switch,” and the market is moving “dramatically” toward “lender-on-lender coordination” rather than conflict.
The shift reflects hard-won creditor protections and a clearer-eyed understanding of litigation risk on all sides. “People understand that there are fewer and fewer avenues for them to exploit the minority. And so, given that dynamic and given the fact that the sponsor, the majority group and the company have so much to lose if a case goes to litigation, things are trending toward a more orderly approach,” Andrew said. The result is a more structured economic outcome: “The majority group gets a baseline of economics, and the minority groups get a small decrement below those economics.”
Cooperation agreements are central to achieving that outcome. “You absolutely need a cooperation agreement so that the minority group remains cohesive. The bigger the minority, the more urgency that the company has to fold in the minority because there’s more risk to the company with a bigger holdout where the objective is to capture discount.” The threat of litigation, Andrew noted, remains a critical lever: “If you try to take too much from the minority, there’s going to be litigation, and that creates downside for everybody.”
Glenn Agre has become a recognized leader in organizing and advising minority creditor groups in complex LME transactions and related litigation.
