Writing in The New York Law Journal, CM Law Partner Robert Dremluk, who practices in the areas of litigation, finance, bankruptcy, and creditors’ rights, discussed the increased focus on liability management exercises (LMEs). He notes that prior to the financial crisis, a borrower was prohibited under the terms of its loan agreement from purchasing its loan. However, as interest rates fell, capital became plentiful, and competition increased among lenders, loan agreements were modified to permit borrowers to use an LME to restructure its loan.
Robert further explains that while LMEs have appeal for both borrowers and lenders, they have significantly disrupted the traditional loan business through aggressive priming and subordination tactics – leading some to characterize this phenomenon as “lender-on-lender violence.” Click HERE to read further about the benefits and liabilities of the LME structure, or reach out to Robert directly at rdremluk@cm.law.
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