Covenants Analysis

Global covenants analysis and research with a focus on the largest and most complicated capital and corporate structures.

RX 101: Use of English Restructuring Tools By Overseas Companies
Fri May 26, 2023 2:58 pm Covenants Analysis

Following the U.K.’s departure from the EU in 2020, distressed European companies continue to make use of English restructuring tools such as the scheme of arrangement and Part 26A restructuring plan.

The English courts have overseen the expansion of scheme jurisdiction in the past 20 years, typically finding the development as an example of “healthy” or “good forum shopping” and since the introduction of the new Part 26A restructuring plan in 2020, this approach has been continued. Most recently, German real estate group Adler chose to restructure its debt using an English restructuring plan rather than make use of its new German equivalent, the STaRUG.

This installment of the RX 101 series reviews the relevant case law and sets out key considerations for offshore companies and their creditors seeking to use English law schemes of arrangement and Part 26A restructuring plans to compromise their liabilities.

Since the new restructuring plan was explicitly designed to build on existing scheme case law, all references to “schemes” in this article incorporate both schemes of arrangement and Part 26A restructuring plans.

Read the full article.

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European Leveraged Finance Trends – How Covenants Evolved in 2022
Fri Jan 27, 2023 3:46 pm Covenants Analysis  Leveraged Finance

Our expert team will provided an overview of:

  • How the market for bond and loan covenants responded to the turbulence of 2022;
  • How investors pushed back on aggressive terms;
  • The outlook for 2023; and
  • How borrowers will use the terms of existing documentation to manage their liabilities.

Watch the replay.

See Reorg’s EMEA Covenants coverage.
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Year in Review — Americas Webinars 2022

Throughout the year, Reorg hosts webinars bringing together industry professionals to discuss themes in the performing, distressed, restructuring and post-reorg credit markets. Reorg’s webinars cover topical credits and industry updates. They’re produced by our reporters and analysts with selected external guests.

Americas Webinars from 2022:

  1. Primary in the Eye of the Storm: Challenges and Opportunities in Leveraged Finance in a Downturn
  2. Hot Topics in Crypto Winter
  3. Winter Came for Covid-Era Darlings? – Distress in Crypto and Tech
  4. Bausch’s Remedies for Potential Patent Defeat & Creditor Angst Over B+L Spin
  5. Puerto Rico’s Restructuring Endgame and Beyond
  6. Revlon – Chapter 11 Cases and Creditor Disputes
  7. CLO Considerations for Distressed Investors
  8. Diebold Nixdorf: Can Significant Unencumbered Assets Overcome Massive Maturity Wall?
  9. Talen Energy Chapter 11 Filing
  10. The Texas Two-Step: LTL J&J Chapter 11 and Likely Future Filings
  11. Samarco – Testing Brazil’s Bankruptcy Reform
  12. Loan Market Trends in 2021 from Americas Covenants
  13. No Surprises Act Rollout: Implementation and Litigation Challenges Ahead

If you would like to be panelist on our upcoming webinars, please contact, and if you would like to be notified for the upcoming webinars, sign up for Reorg on the Record.

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Reorg Special Coverage: EMEA Trackers
Mon Dec 5, 2022 10:40 am Covenants Analysis  Financial Restructuring

RCF Tracker

This tracker provides an overview of performing, stressed and distressed companies which have RCFs in their capital structure with high-yield bonds. The tracker includes the committed and drawn amounts of RCFs, the corresponding financial covenants, covenant waivers and suspensions and if the company is in debt negotiations or refinancing

EMEA Mid Market Deal Pipeline Tracker

The growing macroeconomic uncertainties in Europe are creating a lenders’ market in which direct lenders are increasingly clubbing together to mitigate risk. Meanwhile, private equity investors are wary of committing to companies which have to pass on inflation-linked price hikes to clients, creating a slowdown in European M&A activity.

EMEA Special Situations Tracker

Reorg Europe’s updated special situations tracker is available to all EMEA clients. The tracker includes selected debt and leverage data taken from the capital structures on our website. The tracker provides an overview of stressed and distressed situations that Reorg is following in Europe and CEEMEA and is updated every two weeks. 

Ukraine Invasion Impact Tracker

Ukraine will need significant financial support to fund the reconstruction effort once stability has been restored and the EU and US have already lined up multi-billion support packages for 2023. Ukraine’s own 2023 budget estimates a $38 billion deficit. In this tracker we are looking at companies impacted by the Russian invasion of Ukraine.

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Reorg’s Recent EMEA Webinar Replays

Throughout the year, Reorg hosts webinars bringing together industry professionals to discuss themes in the performing, distressed, restructuring and post-reorg credit markets. View a selection from our EMEA Core Credit team here.

Houst RP Binds Dissenting HMRC – Where Next for SME Restructuring Plans?

Reorg’s Shan Qureshi hosted a webinar covering the first use of the Part 26A Restructuring Plan in the SME market by Houst Ltd. with the advisors on the deal.

The panel discussed “cross-class cramdown” with respect to the U.K. tax authority and explored the interaction between the allocation of a “restructuring surplus” and the “relevant alternative” order of priorities.

Our group of experts also discussed how the English court is becoming pragmatic when it comes to SMEs using the restructuring plan and where we may see more creative deals in the future.

View the recording here.

European Primary Update – What to Expect When the Market Reopens.

The European leveraged finance market enjoyed a blistering start to the year, notching up record issuance levels, fueled by healthy inflows and the market putting on reopening trades.

While market participants expect the torrent of new issues to resume post the August break, a number of potential headwinds loom, such as the tapering of central banks’ asset purchases amid rising inflation, major supply chain disruptions which are increasingly disrupting certain industries as well as the potential risk of winter lockdowns if Covid-19 rates spike again.

In this webinar, Reorg along with high-yield bond and loan investors, looked at the outlook for the European primary leveraged finance markets in the second half, discussing these potential risks, some of the key trends in primary markets and how they expect the rest of the year to shape up
View the recording here.

National Interest Insolvencies – Should these be for the State to Manage?

Over the last few years there have been four large national interest insolvency cases which have gone into compulsory liquidation with The Official Receiver and special managers appointed. In this webinar, our panelists – from Ashurst, EY and The Insolvency Service – discussed if compulsory liquidation is fit for purpose for these big complicated, national interest insolvencies. We also examined the factors pushing these cases into public sector insolvencies rather than private administration.

View the recording here.

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Covenants by Reorg: Citrix LBO Notes Include Aggressive Buildup Basket
Tue Sep 20, 2022 2:20 pm Covenants Analysis

Americas Covenants by Reorg’s review of coverage for the week ended Friday, Sept. 16, is below.

This week, Americas Covenants by Reorg discussed the new secured notes issued in connection with the leveraged buyout of Citrix Systems and analyzed the aggressive restrictive payments buildup basket based on 100% of cumulative EBITDA.

We also discussed NortonLifeLock’s credit agreement entered in connection with the acquisition of Avast. Although the agreement does not provide the company with excessive flexibility, it does include a mechanic that expands borrowers’ ability to carry forward unused annual capacities to the mandatory prepayment provisions. We also analyzed StoneMor’s related party transactions with Axar from a covenants perspective to identify the issues likely raised by the bondholders regarding disclosures included in Item 13 of StoneMor’s 10-K.

In the secondary markets, we initiated coverage on Opendoor Technologies, a property technology company that provides residential real estate services and LendingTree, an online marketplace operator where potential borrowers can connect with multiple loan operators. We have also updated our coverage of Hersha Hospitality and Ultra Clean Holdings. We also prepared an updated covenants tear sheet for Sylvamo based on June 30 financials and analyzed its ability to consummate a recently announced asset acquisition.

In the primary markets, we prepared comprehensive reports on CNX Resources’ $500 million offering of senior unsecured notes due 2031.

This Week Americas Covenants by Reorg Covered:

  1. Audacy Inc.
  2. Avaya Inc.
  3. Bausch Health Companies
  4. Carnival Corporation & plc
  5. Citrix Systems Inc
  6. CNX Resources
  7. Community Health Systems
  8. Hersha Hospitality Trust
  9. Lannett Co. Inc
  10. LendingTree Inc
  11. NortonLifeLock
  12. Opendoor Technologies
  13. Party City Holdco Inc.
  14. Rackspace Technology Inc.
  15. StoneMor Inc.
  16. Ultra Clean Holdings.

If you would like to request an Americas Covenants analysis of any new loan or bond offering, please submit the offering materials to us at

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Intralot’s Dropdown Restructuring Games in Butterworths Journal of International Banking and Financial Law

Authored by Reorg’s expert team in Europe Jamie McDougall, Shan Qureshi, Ben Kovacka and Shweta Rao, this article first appeared in the Journal of International Banking and Financial Law in May 2022.

Intralot is the first European group to restructure its debt using the “J. Crew”-inspired drop-down procedure, transferring its unencumbered US business away from unsecured noteholders due to be repaid in 2024, to be used to support secured debt to refinance unsecured notes maturing earlier in 2021. The trustee for the notes due in 2024 is suing and there is a separate claim for fraudulent transfer.

In this article, the authors explore:

– How unsecured pari passu and pro rata noteholders came to prime others by becoming senior secured noteholders under the drop-down procedure;
– How the drop down was achieved by a US subsidiary issuing unsecured notes due 2025, swapping them for the unsecured notes due 2021 issued by a holding company, being designated an “Unrestricted Subsidiary”, with its shares and assets then being pledged as security for the notes due 2025;
– How Intralot exploited imprecise but standard drafting of the covenants to ensure the value of the US business was low enough to fit within investment basket capacity required to be used for the drop-down;
– Why only 75% of the primed noteholders may have decided to stay being supported by the non-US business rather than exchange for equity in the US business;
– How the different bargaining power among creditor groups impacted the restructuring and resulted in unequal outcomes for creditors in the same class;
– How a minority of 2021 noteholders withheld consent to force repayment of 59% of their notes at par prior to the refinancing-by-drop-down; and
– “J. Crew” blockers as anti-drop-down provisions and their frequency in 2021.

For a copy of the full article contact and you can read more analysis from Reorg’s EMEA Covenants team here.

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Global Credit Highlights – (Friday, June 3, 2022)

In the Americas, stocks rose as market participants straggled back from the long holiday weekend and distressed investors focused increasingly on companies in the auto sector, which is bearing the brunt of component shortages and wage/commodity inflation. The high-yield market had a limited reopening, with eight deals pricing across a variety of sectors including midstream and building supplies. Talen Energy’s chapter 11 proceedings continued, with Talen Montana filing an adversary proceeding to avoid the transfer of certain asset sale proceeds to former parent PPL Corp. and Talen Energy obtaining the support of 71% of unsecured noteholders for its RSA. Chemical manufacturer TPC Group filed for chapter 11, and Service King entered into an agreement that will provide as much as $200 million in new capital.

As in the Americas, companies in Europe are continuing to feel the strain from supply-chain disruptions and inflationary costs. French chilled dough and pancake maker Cerelia is seeking an amendment to be able to raise an €80 million loan amid rocketing input costs. As an added pressure, the primary markets are all but shut, leaving companies with upcoming maturities between a rock and a hard place and banks on the hook for underwritten deals.

As Shanghai is reopening after a months-long Covid-19 lockdown, the Chinese government is eyeing economic recovery and picking winners and losers in the property sector by hosting a virtual road show for five privately held developers to pitch new bond offerings. In Indonesia, a puzzling bondholder identification announcement for palm oil producer Sawit Sumbermas Sarana has market participants chattering, and an unusual judgment shows unpaid creditors can access recourse despite prior appointment of insolvency officer-holders in a company’s place of incorporation if the company can prove sufficient connection with Hong Kong.

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FTLive and Reorg: Global Alternative Credit Summit (May 4-5, 2022) — London program

Private credit is booming with estimates suggesting the market is now worth more than US$1 trillion. Having moved from the margins to the mainstream, this previously niche asset class is proving a real disruptor in debt capital markets, as investors seek out steady and healthy returns, and borrowers opt for new non-bank sources of finance. Hear from market leading experts on distressed restructuring, bankruptcy analysis, and the leveraged loan market in 2022 and beyond.

4 – 5 May 2022
Unlocking Opportunities in Private Debt as the Credit Cycle Turns
In-Person & Digital l Glaziers Hall, London and Harvard Club, New York | #FTAltCredit

The potential for this market is enormous, but there are risks. For LPs, non-bank credit offers diversification uncorrelated with traditional investments; for borrowers, it promises quicker decisions on loans, better tenors and tailored covenants. Yet, despite ample capital, caution remains a watchword as the global credit cycle turns and the pandemic continues to influence the prospects for business and finance. Moreover, with growing calls for greater transparency and tighter regulation in private credit, is now the right time to join this market? Do the benefits outweigh the risks of this dynamic new asset class?

How does this shadow banking market compare to other private asset classes in terms of returns and ease of access? To what extent has it matured to meet the risk and return profile of an increasingly sophisticated pool of global investors? Can current rates of return be sustained in developed markets, against a fast changing and uncertain macro-economic and geo-political background? To what extent will Asia follow a similar growth path? As demand for direct lending, distressed debt, structured credit and leverage finance increases, where will new avenues for growth emerge? How concerned should investors be about warnings around systemic risks, market opacity, standards and illiquidity issues? Is it time to step up the regulation of private credit?

London Program: May 4

Opening remarks from the FT Chair
Robert Smith, Capital Markets Correspondent, Financial Times

View from the Top: How resilient is private debt as the credit cycle turns?
2021 was a bumper year for private credit, with the market size growing to almost US$1 trillion. Demand from investors for new assets is high and the industry is seizing the opportunity to drive growth. But can this be sustained as the credit cycle turns? What impact does the prospect of rising interest rates and higher inflation have on the outlook for borrowers of private credit and generally credit quality? To what extent are private debt market risks reduced by the characteristics of the market, such as floating rate loans, privately negotiated deals and shorter durations? Are issues of transparency and liquidity likely to create challenges if markets become volatile?

  • Katie Martin, Markets Editor, Financial Times
  • Jonathan DeSimone, Chief Executive Officer, Alcentra
  • Ben Levenstein, Head of Private Credit and Alternative Income, Universities Superannuation Scheme
  • Magdalena Högberg, Head of Strategic Asset Allocation and Quantitative Analysis Fourth Swedish National Pension Fund (AP4)

Economist Keynote: Higher inflation and rising interest rates – a threat or opportunity for alternative credit?

  • Gerard Lyons, Chief Economic Strategist, Netwealth
  • Chris Giles, Economics Editor, Financial Times

LP Leaders’ Panel: Is this the right time to expand allocations in private credit?
Globally, the private credit market continues to experience strong growth. Fuelled by strong appetite from investors, the asset class is now a widely accepted part of the strategic allocation for institutional portfolios. However, with capital continuing to move into this space, dry power is increasing as investments with an attractive risk-return ratio are becoming harder to find. What are investors’ current and medium term expectations of returns in this market? How important is credit quality as competition for deals intensifies? How worried should investors be about transparency in this market?

  • Robert Smith, Capital Markets Correspondent, Financial Times
  • Brian Olvany, Head of Private Debt, Zurich Insurance
  • Emma Bewley, Managing Director, Head of Private Debt and Uncorrelated Strategies
    Partners Capital 
  • Mikael Limpalaer, Senior Investment Director, AustralianSuper

Keynote: From shadow banking to mainstream asset class – is private debt now better than public?

  • Josephine Cumbo, Global Pensions Correspondent, Financial Times
  • Marcie Frost, CEO, CalPERS

Panel: Is the Distressed Debt opportunity primed for a new dawn?
Defaults and distressed opportunities seemed likely when the pandemic hit, but stimulus measures and creativity in financing put the market into a holding pattern. Now, as the world economy starts to normalise, and live with Covid, and as talks of tapering become reality, solvency is once again an issue for businesses. As the environment becomes favourable again for distressed investors how is the market cycle developing and how big is the distressed opportunity likely to be? To what extent will current low interest rates affect returns? How cautious should investors be about entering this market, given the ongoing macroeconomic uncertainty?

  • Mario Oliviero, Managing Director, International Credit, Reorg 
  • Christine Farquhar, Co-Head of Credit, Cambridge Associates 
  • Ty Wallach, Managing Director, Chief Investment Officer of Credit, Atlas Merchant Capital
  • Ivelina Green, CIO, Pearlstone Alternative
  • Jason Mudrick, Founder and CIO, Mudrick Capital Management LP
  • Adam Phillips, Partner, Head of DM Special Situations, BlueBay Asset Management

Welcome remarks from FT and Reorg

  • Robert Smith, Capital Markets Correspondent, Financial Times
  • Julie Miecamp, Managing Editor – Europe, Reorg

Panel: Is tighter regulation needed in non-bank lending?
The recent pace of growth in the alternative credit market has taken everyone by surprise, not least regulators and market watchers, some of whom are raising concerns about the potential for systemic risks. Has the time come for more regulation in this market, particularly around fund leverage and liquidity risk management? To what extent is alternative credit’s interconnectedness with the wider financial sector an issue that can’t be ignored? How can market players collaborate with policy makers to shape a regime with protects investors and the wider economy, whilst allowing alternative credit to evolve?

  • Adelene Lee, Managing Editor, Reorg
  • Jiri Krol, Global Head, Alternative Credit Council
  • Nathan Brown, Chief Operating Officer, Arcmont Asset Management

LP Fireside Chat – Harnessing the illiquidity premium of private markets

  • Robert Smith, Capital Markets Correspondent, Financial Times
  • Mark Fawcett, Chief Investment Officer, Nest

Leaders’ Panel: Finding value in private credit – which strategies are most effective in the current market?
Private debt has emerged as the new frontier for private and institutional investors on the hunt for yield. As capital continues to move into this space and dry power increases, where are the pockets of opportunity opening up? What is the outlook for returns in direct lending, fund of funds, distressed debt, special situation funds, and mezzanine finance? To what extent are asset owners adapting their approach, with potential participation in co-investments and secondary markets?

  • Julie Miecamp, Managing Editor – Europe, Reorg 
  • Howard Sharp, Head of Origination – Europe, Alcentra
  • Luis Mayans, Partner and Deputy Head, Private Debt, CDPQ
  • Gregory Racz, President, MGG Investment Group

Closing remarks followed by VIP Networking Dinner

  • Robert Smith, Capital Markets Correspondent, Financial Times
  • Julie Miecamp, Managing Editor – Europe, Reorg
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Reorg on the Record: Risk-on or risk-off, Reorg continues its mission…

Written by Kent Collier, Founder & CEO || Today marks the 100th edition of Reorg on the Record. We started publishing this weekly digest in the months leading up to the onset of the pandemic. A lot has happened in those two years and candidly, at least to me, it feels like a decade.

The environment today feels quite different from March, April and May of 2020. Cases such as Whiting Petroleum, J.Crew, Avianca and many others dominated Reorg’s docket feed and no one knew what a meme stock was (gentle reminder: Gamestop was going through a proxy battle at that time…).

Reorg is also different – we introduced a number of powerful datasets including our DIP, Restructuring and CLO Databases, we bought Aggredium to help power the research processes of high yield and loan market participants and we extended our editorial coverage to cover more salient topics for our subscribers such as primary coverage, litigation overviews, post-reorg analysis and launched our America’s Municipal product offering.

That said, one thing I am ever grateful for is the resilience and steadfastness of the nearly 300 people that work at Reorg. Between March 1, 2020 and today, Reorg has written approximately 70,000 stories. From breaking news to deep dive covenant analysis on new issuance, these stories help our subscribers stay informed of everything going on in the credit markets. Irrespective of market conditions, risk-on or risk-off, Reorg will continue its mission to empower our subscribers with the information that matters and bring transparency to the global credit markets.

Our global teams are delivering the most in-depth data, analysis and reporting on thousands of credits that are either stressed, distressed, performing, going through restructuring or post-reorg. Below is a glimpse into our editorial offering:

Asia: Sri Lanka Sovereign Debt
The Democratic Socialist Republic of Sri Lanka’s benchmark 7.55% $1.5 billion notes due March 2030, are indicated at 49/50.25, up from 48.75/50.25 on Jan. 14. The 2030 notes, which are widely held and traded in Asia, have been indicated at the level of 52.5/56, since Reorg initiated coverage in May 2020. » Continue Reading

EMEA: European Primary Market
The volume of issuance in the European primary market in January 2022 almost halved compared to January last year and, of those companies who came to market, only a third traded up above their issue price. Market jitters spread across the European primary market in the last two weeks of January, causing issuers who did come to market to price wider than initial price guidance and some to rejig or shelve their issuance plans. » Continue Reading

Americas: Mallinckrodt
A month after the close of a hotly contested trial, Judge John Dorsey confirmed Mallinckrodt’s fourth amended plan in an opinion released on Thursday night, Feb. 3. The decision is a victory for the Mallinckrodt debtors and other plan supporters, who defended the plan against a volley of objections challenging its compliance with the confirmation requirements set out in section 1129 of the Bankruptcy Code. » Continue Reading

Americas: Puerto Rico
In a telephone interview with Reorg, outgoing PROMESA oversight board Executive Director Natalie Jaresko stressed that her remaining two months in the post will “absolutely” include taking the commonwealth plan of adjustment effective, a major milestone in Puerto Rico’s broad restructuring that the oversight board is solidly targeting for March 15. » Continue Reading

EMEA: Orpea Groupe
Investors are monitoring Orpea Groupe after the French care home operator appointed Grant Thornton and Alvarez & Marsal to conduct an internal review following a string of allegations including mistreatment of residents and potential labor law violations, sources told Reorg. Since the allegations, Orpea’s share price has plummeted. » Continue Reading

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