Recent Developments in Acquisition Finance

October 01, 2015

When a portfolio company underperforms, a sponsor may consider various options to address the perceived performance issues, including changes to a portfolio company’s management team, cost structure, capital structure or other parameters, depending on the nature of the issue(s) at hand. When changes in capital structure may be desirable, often in the context of excessive debt and related liquidity issues, a sponsor’s choices may include a consensual workout outside of bankruptcy, or a court-supervised restructuring under Chapter 11 of the U.S. Bankruptcy Code that can restructure and discharge debt over the objections of certain dissenting creditors. The range of options available to a sponsor in such situations has potentially been narrowed by a recent court decision.

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