Advanced Negotiation Issues in Restructuring Debt

Date 1 Jun / 4 Oct
Times 09:00 - 17:00
Cost £675.00 + VAT (£810.00)
SRA CPD Hours 6

Course Overview

Conventional wisdom suggests that restructurings follow the priority of claims ensconced in Law (e.g. employee claims) or a contractual framework via the payment waterfall. In practice this is not always the case and, particularly in more complex deals, the key issue is to get a seat at the restructuring table to influence the process.

Gaining influence depends on a wide variety of issues; whether the party has security, their ranking and subordination, their rights under the Loan and related Inter-creditor and Security documents (Leveraged loans offer far more control than I-Grade documents), the nature of the credit (in restructuring bonds are generally less flexible than loans) and the importance of the party to the on-going business (management or key suppliers). 

In addition, Jurisdiction is also critical in various respects; some being debtor friendly (e.g. France, Italy) and others being creditor friendly (e.g. UK, Germany); whilst some jurisdictions offer swift procedures (pre-Packs) and others slow procedures (Saveguarde). This latter aspect has meant that forum shopping has become increasingly prevalent as parties seek to exploit anomalies in the various jurisdictions and access procedures which expedite the process.

These issues assume greater impact in more complex deals which typically feature layers of junior debt (Second Lien or Mezzanine) or comprise bifurcated loan/bond structures which have become more prevalent with the advent of greater bond issuance since 2007. Restructuring may also require negotiation between the various players across the table; Banks with Management (e.g. to prevent them filing too early), Management with Sponsors and Employees. In some cases negotiations may ensue between parties in the same instrument, typically where they have competing agendas (e.g. primary vs aggressive secondary). This trend is on the increase with the arrival of new and more aggressive distressed debt funds seeking to arbitrage value or even acquire control of the equity.

This course explores the negotiating levers which various parties can use to obtain a seat at the negotiating table together with the restructuring methods, solutions, techniques and tactics for managing all the players as well as the practical issues which will face parties in leveraged and unleveraged deals and, drawing on the trainer’s experience, offers a practical template on how to respond to the issues they are likely to face. The course is aimed at lenders, sponsors, lawyers, accountants and other advisers involved in this sector, management and other professions (investment advisers) operating in the European environment who require a greater insight into the key issues which arise in financial restructurings.

 Course Content

 Overview of typical structures

  • Investment Grade
  • Sponsored deals
  • Laminated structures featuring senior and junior debt
  • Bi-furcated structures featuring loans and Bonds
  • Subordination & ranking and why it matters

 Negotiating levers for the various parties

  • Levers for Senior secured lenders (pre-default & post default)
  • Levers for Junior secured lenders (pre-default & post default)
  • Levers for unsecured junior lenders
  • Levers for unsecured (trade) creditors
  • Levers for Equity holders (Management and PE)

 Triggers for restructuring

  • Key triggers for Investment Grade and High Yield corporates
  • The three key stages: Events of Default, Acceleration & Enforcement
  • Director’s liability: the key catalyst in Restructuring
  • Mitigating risk for Directors, Lenders & Advisors

Restructuring overview: 6 steps, 4 ingredients, 10 options

  • The Restructuring route-map – 6 key steps
  • Four key ingredients for successful turnaround
  • Ten key options for restructuring
  • Restructuring methods

 Methods of Implementing Restructuring

  • Formal vs Informal/Consensual Restructuring
  • Sale and other methods of transfer to NewCo
  • CVA
  • Scheme of Arrangement
  • Administration and Prepacks

 Restructuring Options and Issues: 10 or more options

  • Sticking plaster methods (Amortisation changes, Covenant waivers/resets, Amend & Extend, Forward Start))
  • Debt buyback & Equity cures
  • Hamburger strategy
  • M&A, Demergers
  • New money (internal & external)
  • Debt for Debt swaps
  • Debt for Equity swaps

 Issues specific to syndicated / laminated deals

  • Role of the agent bank & security trustee
  • Syndicate composition – who is in /out (sub-participations)
  • Steering Committees – issues in formation
  • Standstills agreements – key terms, difficult issues
  • Transfer rights and restrictions
  • Waivers & restrictions (majorities & super majorities)

 Debt for Debt & Debt for Equity swaps

  • Mechanics – formal vs informal procedures
  • Form of new & old money
  • Issues for new equity/debt
  • Pay-in-Kind (PIK), Pay-if-you-Can (PIYC), Pay-if-you-Want (PIYW)
  • Warrants,
  • Preference shares
  • Convertibles
  • Equity (ranking, types)
  • Shareholder protection
  • Information issues
  • Exit issues
  • Priority and ranking

 Hot Legal / Regulatory issues

  • Jurisdiction & Impact of COMI
  • Pensions (UK)

Delivering this course in-house for you to a number of participants could be very cost effective. Please call us on 020 7387 4484 to discuss this further.

If you have any questions about this seminar please write to us at post@redcliffetraining.co.uk.

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Course Cost

£675.00 + VAT

Looking to book more than one course? Please click here.

Contact us if you are looking to book multiple participants as we offer discounts as follows:

  • 1-2 participants - full price
  • 3-4 participants - 15% discount
  • 5-6 participants - 20% discount
  • 7-8 participants - 25% discount
  • Over 9 participants - 30% discount