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Matthias Knab, Opalesque for New Managers:

A groundbreaking white paper from Ironshield Capital Management examines how aggressive liability management exercises (LMEs) are reshaping credit market dynamics and creating both risks and opportunities for institutional investors.

The research reveals that over 50% of global debt restructurings are now conducted through LMEs or distressed exchanges, with large distressed funds and private equity sponsors increasingly using aggressive tactics to gain advantage in restructurings. This trend, combined with the erosion of lender protections since the COVID-19 pandemic, has created an environment ripe for what the authors term "creditor-on-creditor violence."

While U.S. markets have seen the most extreme cases of these aggressive tactics, European markets are not immune. The paper argues that traditional assumptions about creditor protections in European markets may be challenged as economic pressures mount and major U.S. firms increasingly influence restructuring approaches.

"The emergence of these practices in Europe could lead to significant mispricing and create lucrative opportunities for those specializing in distressed positions," notes the research. The authors highlight how cross-class cramdown mechanisms, introduced by recent European insolvency reforms, are already being tested in high-profile cases like Adler Group and Casino.

The paper examines several key developments:

• The rise of "uptiering" transactions where certain creditors move into senior positions while others are left behind
• The increasing use of "dropdown" transactions to transfer assets away from existing creditors
• How covenant-lite loan documentation has enabled unprecedented restructuring tactics
• The emergence of creditor "co-op" agreements as a defensive response

INVESTOR WORKSHOP on Jan 15th

The authors will be discussing their findings in detail at an upcoming interactive investor workshop "Creditor-on-Creditor Violence: New Dynamics in Distressed Debt" on Wednesday, January 15th at 11 am ET. The session will explore emerging risks and opportunities, regulatory changes, and strategies for proactive investors in both European and U.S. markets.

Participants in the upcoming webinar will gain actionable insights into:

1. Emerging Risks and Opportunities: Explore the implications of LMEs and understand why European markets may soon experience volatility akin to U.S. credit markets.
2. Impact of Regulatory Changes: Learn how evolving legal frameworks in Europe and the U.S. are reshaping creditor dynamics.
3. Proactive Investment Strategies: Discover how to identify distressed credit opportunities while safeguarding positions against increasingly aggressive restructuring tactics.

This event is tailored for institutional investors, distressed debt specialists, and credit fund managers who need to stay ahead in a rapidly changing market. Attendees will have the opportunity to ask questions directly and receive a replay link for on-demand viewing.

Date and Time: Wednesday, January 15, 2025, at 11:00 AM ET (4:00 PM GMT, 5:00 PM CET, 6:00 PM Riyadh, 7:00 PM Dubai).
Registration: https://www.opalesque.com/webinar/
Duration: 45 minutes, including a live Q&A session.

Register now to secure your spot and receive a complimentary copy of Ironshield's comprehensive white paper on creditor-on-creditor violence.

This is a must-attend event for those seeking to understand and capitalize on the shifting dynamics in distressed debt markets.

The webinar will be accessible via computer, tablet, or smartphone, with a replay available for registered participants.