New Course Announcement: The Framework for Analyzing LMEs

We can no longer assume that funds will be repaid to lenders at par.

That was the opening message to the room as we filmed our newest course at Fox Legal Training: A Framework for Analyzing Liability Management Exercises.

This course has been six months in the making. Every time I scheduled it for production, I had to update it again. Serta, Mitel, Selecta, Altice (x3), and Pfeiderer happened, then Altice USA filed on the co-op itself. The cycle of loose docs, borrower flexibility, litigation, and drafting around court decisions just kept turning.

So I drew a line and brought together everything we know up to now into a single analytical framework that credit professionals can apply to any borrower to determine: what is the art of the possible?

The framework walks through a step-by-step process:

• Ascertain the goals of the parties
• Analyze the capital structure through the lens of guarantors and collateral
• Identify and stress-test blockers (from J.Crew through to the Omni blocker)
• Assess amendment capacity and sacred rights
• Calculate secured debt and priming risk through the debt and liens analysis
• Evaluate dropdown capacity via restricted payments and permitted investments
• Review pro rata repayment and sharing provisions for significant exceptions
• Examine the asset sales covenant, including fair market value and application of proceeds

If you are a lender sitting in a position where your borrower might be considering its options, the worst thing you can do is freeze up with indecision. This framework is designed to get you to the next step.

One of the most important tips from the course: don't just look at the contract. Look at the company. If there's a crown jewel asset, lock it down. The most powerful protections are the ones that address the practical reality of the borrower, not just the legal architecture.

The course is available now on the Fox Legal Training platform.

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