Partner Shai Schmidt recently spoke with Debtwire about the shift he is seeing in how minority lenders are approaching distressed situations.
Shai, who frequently represents creditors excluded from majority lender groups, highlighted that CLOs and other minority lenders are becoming more strategic and sophisticated, engaging advisors earlier and organizing proactively through cooperation agreements. This early coordination allows minority lenders to align more effectively and strengthen their leverage, including through minority cooperation arrangements.
A notable example of this trend occurred when a sizeable minority bondholder group to Saks, advised by Glenn Agre and Greenhill, formed under a landmark cooperation agreement and considered its own financing proposal for the issuer.
As Shai noted, “A clear understanding of lender protections under the credit agreement, combined with early engagement with the borrower and other stakeholders, is critical. LMEs nowadays tend to be more inclusive, which makes early organization by minority lenders even more important.”
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