Our Legal Insights Blog

Covenants are meant to act as a safeguard for creditors by keeping borrowers in check. But what happens when those protections turn out to be weaker than expected? The recent turmoil surrounding Altice France and Ardagh offers a harsh reminder that covenant loopholes can create serious risks, sometimes in ways investors don’t anticipate.

“All levfin market participants must be equipped to navigate new risks from looser covenants – which drive borrowers’ ability to avoid repaying par – as defaults and distress rise. There is a mental block to reading contracts that can be solved with legal training.” FLT Founder Sabrina Fox

In leveraged finance, understanding legal and strategic moves is key to managing risks and opportunities. The announcement about Altice’s restructuring negotiations with its lenders, and the growing use of liability management blockers of various formulations are two recent examples that can provide key insights for investors navigating these complexities.

Thames Water’s financial woes were the focus of this week’s Knowledge Series webinar with market veteran Glenn Zahn and Fox Legal Training founder Sabrina Fox. They examined the court’s 178-page sanction decision and its implications for distressed investing, public utilities, and regulation.

This week’s refinancing for Rekeep stands out as an excellent example of negotiating strong lender protections. In this blog, we break down the key features that make this deal better for investors.

Thames Water marks one of the most significant corporate restructurings in UK history, with a £19 billion debt stack under review. As the first major test of the 2020 UK restructuring plan process, this case brings unprecedented complexity and sets new standards for future restructurings.

When I conduct a Red Flag Review for a refinancing, I look for key changes. These can be big, especially if the borrower hasn’t issued in a while, the market has shifted, or ownership has changed. But sometimes, like with Engineering Group’s deal this week, the changes are minimal. In this blog, I summarize the three main areas.

It’s been a busy year for covenant flexibility in the leveraged finance market, and FLT HQ has been tracking many of the key trends through our blogs and YouTube videos. We published 26 blogs and 33 videos this year, absolutely packed with legal knowledge and practical insights. In this final blog of 2024, we present some of the covenant and educational highlights of 2024.