Partner Shai Schmidt spoke with The Deal about the evolving role of liability management exercises (LMEs) as market uncertainty intensifies.
“I expect to see even more LMEs moving forward," said Schmidt. "In the face of disruption to businesses, tariff- related uncertainty and general market volatility, many sponsors will continue to perceive an LME as a better alternative than bankruptcy with all its attendant costs."
He added, "For many sponsors, the decision to do an LME is not necessarily a tough one. From the sponsor's perspective, you roll the dice hoping that the business will perform better, while preserving your optionality and without giving up your equity."
The article highlights market forecasts for rising distressed debt activity, as issuers face increasing challenges accessing the public capital markets to address near-term maturities. It also surveys recent precedent-setting LMEs to track how these transactions are evolving—including several where Glenn Agre represented minority lenders, such as Tropicana, Better Health, and Oregon Tool.