Pre-Chapter 11 Priming Transactions: Creating Liquidity, Delaying Maturities, Removing Covenants
Liability Management Transaction Structures and Vulnerabilities in or out of Bankruptcy

Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Bankruptcy
- event Date
Wednesday, July 12, 2023
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will discuss strategies that borrowers are increasingly using to create liquidity, delay maturities, and relieve covenant pressure to prevent bankruptcy while also allowing certain creditors to maintain control and preferred priority if bankruptcy ensues. The program will discuss how these transactions work; how they compare with post-petition financing, roll-ups, and priming; their vulnerabilities in bankruptcy; and how different constituencies can respond.
Faculty

Mr. Norton, a member of the firm's global finance practice, focuses on corporate finance matters, with particular emphasis on acquisition finance. His experience includes advising on syndicated senior and junior leveraged debt, bridge loan financings and high yield issuances in the U.S., Europe, Asia and Latin America, including numerous U.S. and European TLB and Yankee loan transactions. He advises corporates, financial institutions, financial sponsors and funds on a variety of finance matters such as leveraged finance, general finance, liability management transactions as well as restructurings.

Mr. Shamah is a premier restructuring lawyer who is universally lauded by peers and clients for his expertise in complex restructuring and insolvency matters. Not only is he adept at conventional bankruptcy and restructuring proceedings, he is also an experienced litigator and handles disputes surrounding some of the most complex commercial and financial instruments across a broad range of industries and practices. Because of Mr. Shamah’s creative approach and exceptional knowledge base, leading financial institutions, private equity sponsors, hedge funds and public and private companies call on him to help them navigate a host of bankruptcy and restructuring issues. From lender liability and fraudulent conveyances to distressed debt investments and complex commercial litigation, he has achieved successes for his clients in every type of restructuring scenario—and his track record proves it.

Ms. Taylor is a partner in O’Melveny’s corporate finance and restructuring practice groups. She is also a member of O’Melveny’s Fintech and Emerging Technologies industry groups. Ms. Taylor has deep experience negotiating debt financing transactions of all varieties, including financings for leveraged buyouts, secured and unsecured working capital facilities, venture debt facilities, and other structured financings, including mezzanine loans, high yield, and DIP financing for debtors in bankruptcy.

Mr. Haberkorn is a corporate counsel in O’Melveny’s New York office who focuses his practice on advising clients in in-court and out-of-court restructurings and in executing complicated financing transactions. He has extensive experience in corporate bankruptcy-related matters, and has represented debtors, creditors, lenders, purchasers, and other parties-in-interest in a wide variety of industries.
Description
To address both liquidity and cash issues, debtors, together with cooperative creditors, are more frequently using transactions usually seen in post-petition DIP financing, such as roll-ups or roll-overs and priming liens, in the pre-bankruptcy period to secure cash and/or liquidity as well as to obtain relief from maturity dates covenants.
In "drop-down" transactions, the borrower transfers assets to new subsidiaries, which then borrows against them, putting them beyond lenders who had assumed those assets secured their liens. In "uptiering" transactions, existing lenders "roll up" their existing debt to a super-priority senior position ensuring they are in control of future restructuring in or out of bankruptcy. Financings for Revlon, Tri Mark, J.Crew, Travelport, Neiman Marcus, and PetSmart are some examples of these priming transactions.
Understanding how these transactions work, what steps those creditors excluded from these leaps in priority can consider, how these transactions fare in bankruptcy, and remedies for creditors are critical for both bankruptcy and finance attorneys.
Listen as this renowned panel guides counsel through how these historically Chapter 11 transactions are being used in pre-Chapter 11 scenarios, the challenges they face, and how they fare in bankruptcy.
Outline
- Rise of liability management transactions
- Drop-down financing
- Uptiering transactions
- Relevant cases
- Impact on reorganization and confirmation
Benefits
The panel will review these and other key issues:
- How do pre-filing uptiering and drop-down transactions affect Chapter 11?
- Are liability management transactions vulnerable to fraudulent transfer claims?
- Are liability management transactions only relevant in participation?
- Could a Chapter 11 plan release claims between creditors?
Related Courses

Chapter 11 Fundamentals: Debtor-In-Possession Financing and Use of Cash Collateral
Tuesday, February 11, 2025
1:00 p.m. ET./10:00 a.m. PT
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