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Course Details

Course Information
  • smart_display Format

    Live Online with Live Q&A

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Wednesday, December 31, 2025

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE webinar will discuss the growing popularity of payment-in-kind (PIK) interest features in private credit facilities. The panel will explore common PIK structures, highlight the benefits and risks associated with PIK interest terms, and provide practical guidance for negotiating and drafting these terms in new and existing loan agreements.

Faculty

Jennifer Post
Partner, Co-Chair Emerging Companies Group
Thompson Coburn LLP.

Ms. Post serves as primary outside counsel to entrepreneurs, venture capital funds and operating companies with an emphasis on transactional and finance matters. Her practice encompasses general corporate and securities law and commercial finance transactions. Ms. Post represents investors, lenders and emerging companies in venture capital, private equity, lending, M&A and fund formation work. She has a unique niche representing venture debt funds and other direct lenders in secured transactions involving technology, fintech, life sciences, SaaS and consumer brands in the private credit markets.

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Description

PIK interest provisions allow borrowers to accrue interest to the loan principal instead of making cash-based interest payments at regular intervals. Due to their flexibility and convenience, PIK interest terms have become a growing trend in the private credit market because they permit borrowers to incur their desired amount of leverage without sacrificing their liquidity position and provide lenders with significant returns.

While there are many variations of PIK interest provisions, most provisions fall into one of three categories: full PIK, discretionary PIK, or a PIK toggle, which allows borrowers to switch between PIK interest and cash pay interest based on predefined performance metrics. A fourth PIK tool that has been gaining some traction is the synthetic PIK structure which allows borrowers to pay interest in cash through a separate synthetic interest loan facility that functions as a capital reserve for PIK interest payments.

While PIK interest terms can be beneficial to borrowers, lenders, and equity holders, there are key considerations for all parties involved. Counsel must understand the potential risks and pitfalls that can arise with PIK interest terms to ensure their client's interests are protected over the life cycle of the loan.

Listen as our expert panel explains the benefits of PIK interest terms, the complexities and potential risks, and key drafting and negotiation considerations.

Outline

  1. Background: PIK interest provisions in today's market
  2. Types of PIK interest terms and their key features
    • True PIK
    • Contingent PIK
    • PIK toggle
    • Synthetic PIK
  3. Circumstances when PIK provisions are used
  4. Triggers, toggles, and availability periods
  5. Benefits of PIK interest provisions
  6. Potential pitfalls to avoid
  7. Strategic considerations for borrowers, lenders, and equity holders in distressed companies
  8. Negotiating and drafting tips
  9. Practitioner pointers and key takeaways

Benefits

The panel will discuss these and other key considerations:

  • How have current market conditions created a rise in the number of PIK interest loans?
  • What are the various forms of PIK interest terms and what are their key features?
  • What are the benefits and potential pitfalls with PIK interest loan terms?
  • What are key considerations for negotiating and drafting PIK interest provisions from both the borrower's and lender's perspective?