Unitranches Structures and Enforceability of AALs Including Insights from RadioShack Bankruptcy Court

Structuring Agreements Among Lenders, Maximizing Recovery for First-Out and Last-Out Lenders

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

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Conducted on Thursday, July 30, 2015

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Course Materials

This CLE course will discuss the varying structures of unitranches that are in the market today, considerations regarding the enforceability of Agreement Among Lenders (“AALs”), and the Delaware Bankruptcy Court’s recent consideration of the RadioShack Corp. AALs.

Description

The document binding lenders in a unitranche is usually an AAL which, unlike an intercreditor agreement, often does not include the borrower as a party and which the borrower sometimes does not see. Unitranches continue to be popular in the middle market and a few different structures are now widely used in the market. Practitioners need to understand the varying structures and the considerations that go into why one structure might be preferred over another in a particular deal.

Additionally, enforceability of the AAL in bankruptcy remains uncertain. AAL enforcement is largely untested in bankruptcy cases. However, in the current RadioShack Corp. asset sales battle, the Delaware Bankruptcy Court considered the relative rights of first out and last out lenders under an AAL and implicitly recognized the AAL.

Open questions regarding the enforcement of AALs remain, including among other issues, plan classification and voting, adequate protection, and the lender’s entitlement to post-petition interest. Lender’s counsel must understand the structures in the market today and the AAL issues associated with these transactions.

Listen as our authoritative panel of finance practitioners analyze the varying structures of unitranches that are in the market today, considerations regarding the enforceability of AALs, and the Delaware Bankruptcy Court’s recent consideration of the RadioShack Corp. AALs.

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Outline

  1. Overview regarding unitranches
  2. Current trends in unitranches and different structures that have evolved in the market
  3. Enforceability of AALs in event of default or bankruptcy
    1. Discussion regarding enforceability of AALs
    2. Analysis of the Delaware Bankruptcy’s Court’s consideration of the AALs in RadioShack Corp.
  4. Other potential bankruptcy issues
    1. DIP financing provisions
    2. Entitlement of lenders to adequate protection/post-petition interest
    3. Credit bid provisions
    4. Plan classification disputes

Benefits

The panel will review these and other key issues:

  • What are current trends in unitranches and how are these facilities structured?
  • What are the enforceability issues regarding AALs and what guidance did the Delaware Bankruptcy Court provide in the recent litigation among AAL lenders in the RadioShack bankruptcy?
  • What are other potential bankruptcy issues in unitranches and what are the possible outcomes?

Faculty

Jennifer B. Hildebrandt
Jennifer B. Hildebrandt
Of Counsel
Paul Hastings

Ms. Hildebrandt represents banks, commercial finance companies, hedge funds, and other lenders in commercial and...  |  Read More

Yount, Jennifer
Jennifer St. John Yount
Partner, Corporate Department
Paul Hastings

Ms. Yount’s practice consists of representing banks, finance companies, and other lenders in working capital...  |  Read More

Andrew V. Tenzer
Andrew V. Tenzer
Partner, Corporate Department
Paul Hastings

Mr. Tenzer represents lenders, troubled companies, and buyers and sellers of distressed assets in Chapter 11...  |  Read More

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