Liability Management Exercises: Law and Practice is the first comprehensive practitioner text on liability management exercises (LMEs) across the UK, US, and Canada. As borrowers and sponsors increasingly turn to LMEs as alternatives to, or precursors of, formal insolvency proceedings, understanding these techniques has become essential. This practical guide provides a detailed and comparative analysis of the legal, documentary, and strategic considerations shaping modern balance sheet restructurings.
Covering the full lifecycle of an LME transaction, the book equips lawyers, debt investors, restructuring professionals, and financial advisors to assess documentary capacity, structure transactions, anticipate litigation risk, and evaluate court-driven alternatives. It examines covenant flexibility, amendment mechanics, intercreditor dynamics, and creditor protections. It also provides in-depth discussion of leading cases, including Serta Simmons and Mitel.
The book analyses the principal forms of liability management transaction, including drop-downs, uptiers, double dips, distressed exchanges, pari-plus transactions, and hunter-gatherer structures. It explains both their commercial rationale and the documentary provisions that enable or constrain them. The book also situates LMEs within the wider restructuring landscape, demonstrating how they interact with schemes of arrangement, UK restructuring plans, Chapter 11 proceedings, and Canadian CCAA processes.
A central hypothetical borrower ("NewCo") is used throughout to demonstrate how restructuring transactions are executed in practice. By applying the same evolving fact pattern across multiple scenarios, the book shows how covenant capacity is assessed and how restructuring options are developed. It also illustrates how outcomes can differ for participating and non-participating creditors.
Written for legal practitioners, financial advisors, investors, and academics, this first edition is an essential resource for anyone involved in complex debt restructurings and liability management transactions.
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