Guide to representing bondholders in a restructuring
Produced in partnership with Phillip Taylor, Tamer Bahgat and Michael Lee of Alston & Bird

The following Restructuring & Insolvency practice note produced in partnership with Phillip Taylor, Tamer Bahgat and Michael Lee of Alston & Bird provides comprehensive and up to date legal information covering:

  • Guide to representing bondholders in a restructuring
  • Strategy and types of holders
  • First steps
  • What information is available to you?
  • Who are the holders of the bonds and what is the nature of their holding?
  • What is the existing transaction structure?
  • Who is the trustee?
  • What are the triggers for a restructuring?
  • Who has control of the process?
  • Who will pay the legal fees?
  • More...

Guide to representing bondholders in a restructuring

High yield bondholders have been playing an increasingly significant role in restructurings. In previous cycles, even though high yield bonds have featured in some larger European corporate capital structures, restructuring negotiations had been primarily driven by senior bank or other syndicated lenders. This is mainly because high yield bonds were often unsecured, with little or no prospect of any real recovery in a liquidation, unlike leveraged loans which are usually secured. Consequently, high yield bondholders typically had limited influence on restructuring negotiations.

Strategy and types of holders

Since the global financial crisis, the leveraged finance market has experienced a shift towards the use of high yield bonds, partly due to tightened leveraged lending guidelines applicable to leveraged loans. Coupled with strong M&A activity fuelling the continued growth of the market, European borrowers have increasingly turned to the high yield bond market to refinance their senior, mezzanine and second lien leveraged loans. Such refinancings often resulted in the new high yield bond taking the benefit of similar security and guarantee packages to the loans being refinanced, with senior secured high yield bonds becoming more common than unsecured bonds. Commercially, because the holders of a secured bond may be more likely to have a real economic interest in the outcome of a debt work-out, high yield bondholders now enjoy a much stronger

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