Distressed Loan Workouts: How Equity Cure Rights Work, Negotiating Loan Restructuring and Forbearance Agreements

Curing and Addressing Financial Covenant Breaches From Lender and Borrower Perspectives

Recording of a 90-minute CLE webinar with Q&A


Conducted on Thursday, August 18, 2016

Recorded event now available

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Program Materials

This CLE webinar will provide counsel with strategies for restructuring a distressed loan, focusing on equity cure rights and loan amendment and modification techniques. The program will discuss strategies from the perspectives of both lenders and borrowers to execute a successful and efficient workout-out strategy.

Description

Equity cure rights give the borrower, or the borrower’s financial sponsor, the right to contribute equity upon a default of an EBITDA-based financial covenant to increase its calculated earnings before interest, tax, depreciation and amortization.

Lenders will seek to negotiate certain restrictions on the equity cure right, namely limits on the source of capital, use of the proceeds, amount, frequency/timing and impact of prepayment.

Post-default, both the lender and the borrower must execute a work-out strategy that includes either a forbearance agreement or a loan restructuring agreement.

Listen as our authoritative panel of finance attorneys guides you through strategies for restructuring a distressed loan, focusing on equity cure rights and loan modification and restructuring techniques. The panel will provide insights for both lenders and borrowers to execute a successful and efficient workout-out strategy.

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Outline

  1. Equity cure right structures, impact on EBITDA
    1. Restrictions and limitations on equity cures
      1. Type of equity
      2. Source of capital
      3. Use of proceeds
      4. Amount
      5. Frequency/timing
      6. Impact of prepayment
  2. Post-default alternatives
  3. Forbearance agreements
  4. Restructuring agreements

Benefits

The panel will review these and other key issues:

  • What benefits do equity cure right provisions provide borrowers in sponsor-backed deals and what restrictions do lenders seek to impose on the right to cure?
  • What is the difference between forbearance and restructuring—and which option is best for the lender or the borrower?
  • What steps can the lender take during a loan workout to strengthen its position and minimize its risks in bankruptcy or foreclosure sale?

Faculty

Spiro, Vanessa
Vanessa G. Spiro

Partner
K&L Gates

Ms. Spiro is a member of the firm's banking & asset finance practice group. She has substantial experience in...  |  Read More

Bukola Mabadeje
Bukola Mabadeje

Atty
Buchalter Nemer

Ms. Mabadeje practices in the area of commercial lending, technology & life sciences lending, and real estate...  |  Read More

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Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

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