Wayne Beck Discusses Use of Liability Management Exercises in European Financial Market in Pitchbook

In the Pitchbook article “Europe's Endless Chase for the Perfect LME Blocker,” London finance and restructuring partner Wayne Beck commented on the continuing fight in European finance between borrowers who pursue liability management exercises (LMEs) and creditors who try to block them through loan and bond documentation.

Beck explained how a new wave of cases could signal the end of a pause on the use of LMEs. To help work around reactive drafting of LMEs, companies have started using “omni-blocker” clauses, which are designed to “close any remaining loopholes,” the article noted. Beck added that omni-blockers, and overly restrictive documentation generally, could “inadvertently prevent a consensual restructuring,” despite having a majority of stakeholders supportive of the restructuring.

“I think LMEs will remain an important topic over the next 12 to 18 months, and we could see aggressive LMEs that will most likely end up challenged,” Beck said. “But, at the same time, litigation can be expensive, so it is possible that the less aggressive LMEs will go unchallenged.”