Liability Management Exercises: Law and Practice

Why should you buy Liability Management Exercises: Law and Practice

Liability Management Exercises: Law and Practice is the first comprehensive practitioner text on liability management exercises (LMEs) across the UK, US, and Canada. As borrowers and sponsors increasingly turn to LMEs as alternatives to, or precursors of, formal insolvency proceedings, understanding these techniques has become essential. This practical guide provides a detailed and comparative analysis of the legal, documentary, and strategic considerations shaping modern balance sheet restructurings.

Covering the full lifecycle of an LME transaction, the book equips lawyers, debt investors, restructuring professionals, and financial advisors to assess documentary capacity, structure transactions, anticipate litigation risk, and evaluate court-driven alternatives. It examines covenant flexibility, amendment mechanics, intercreditor dynamics, and creditor protections. It also provides in-depth discussion of leading cases, including Serta Simmons and Mitel.

The book analyses the principal forms of liability management transaction, including drop-downs, uptiers, double dips, distressed exchanges, pari-plus transactions, and hunter-gatherer structures. It explains both their commercial rationale and the documentary provisions that enable or constrain them. The book also situates LMEs within the wider restructuring landscape, demonstrating how they interact with schemes of arrangement, UK restructuring plans, Chapter 11 proceedings, and Canadian CCAA processes.

A central hypothetical borrower ("NewCo") is used throughout to demonstrate how restructuring transactions are executed in practice. By applying the same evolving fact pattern across multiple scenarios, the book shows how covenant capacity is assessed and how restructuring options are developed. It also illustrates how outcomes can differ for participating and non-participating creditors.

Written for legal practitioners, financial advisors, investors, and academics, this first edition is an essential resource for anyone involved in complex debt restructurings and liability management transactions.

Key features

• Comprehensive cross-border analysis - Covers LMEs in the UK, US, and Canada, highlighting key legal, structural, and jurisdictional differences.

• Practical, transaction-focused approach - Explains how covenants, baskets, amendment thresholds, intercreditor provisions, and process-control mechanisms operate in real transactions.

• Structure-by-structure coverage - Examines the principal forms of LME, including drop-downs, uptiers, double dips, distressed exchanges, pari-plus transactions, and hunter-gatherer structures.

• Scenario-based learning - A consistent hypothetical borrower (NewCo) illustrates complex restructuring techniques and creditor outcomes step by step.

• Up-to-date case law and market developments - Includes detailed discussion of Serta Simmons, Mitel, and other significant developments shaping the liability management landscape.

• Drafting and documentary insight - Incorporates practical examples and extracts from finance documents to support real-world application.

• Stakeholder and litigation perspectives - Considers the positions of borrowers, creditors, sponsors, and advisors, together with the disputes and legal challenges that frequently arise in LME transactions.

• Court-driven alternatives - Analyses restructuring plans, schemes of arrangement, Chapter 11, the CCAA, and related processes as both alternatives and complements to out-of-court LMEs.

List of contributors

• Anne E. Beaumont, Friedman Kaplan Seiler Adelman & Robbins

• Edward Best, Willkie Farr & Gallagher LLP

• Julian Bulaon

• Celine Buttanshaw-Chan, PVTL Point

• Joshua Clark, Fitch Ratings

• Edward Downer, Ropes & Gray

• Ian Yiheng Feng, Covenant Review

• Paul Fradley, South Square

• Michael Handler, King & Spalding LLP

• David K. Hong, Paul Hastings

• Daniel Judd, South Square

• Jane Komsky, 9fin

• Jessica Ling, Paul Hastings

• Jeff Pawlitz, Willkie Farr & Gallagher LLP

• Helena Potts, Paul Hastings

• Restructuring__, Pari Passu

• Maria Staiano-Kolaitis, Paul Hastings

• Philip Taylor

• Virginia Torrie, Torrie Law