Liability Management Protections in Amendments and Waivers: A Practical Guide (Volume 42, Number 6–June 2026)
Author: Adam L. Shpeen.; Jon Finelli.; David Kratzer.
Source: Volume 42, Number 06, June 2026 , pp.65-72(8)
Abstract:
Liability management transactions have become a prominent feature in the leveraged loan market, enabled by covenant flexibility that allows companies to transfer assets, incur senior debt, and alter creditor priorities outside of bankruptcy. In response, a growing set of contractual blockers has been designed to limit the transaction pathways that make these restructurings possible. This article provides a practical guide to the principal blockers and the key drafting considerations for lenders seeking to incorporate them in amendments, waivers, rescue financings, and post-LMT credit agreements.Keywords: Liability Management Transactions (“LMTs”); LMT “Blockers”; Drop-Down Transactions; Pari-Plus or “Double-Dip” Transactions; Uptier Transactions; Non-Pro Rata Transactions
Affiliations:
1: Davis Polk & Wardwell LLP; 2: Davis Polk; 3: Davis Polk.