Inside the Blood Sport of Creditor-on-Creditor Violence

In this episode of the Odd Lots podcast, the hosts delve into the concept of "creditor-on-creditor violence" within the realms of leveraged finance and private credit. This term describes how lenders with different levels of seniority can exploit legal loopholes in loan agreements to gain an edge over their peers during refinancing or restructuring, often putting smaller lenders at a disadvantage. Initially, it was believed that this issue was less common in the private credit market due to closer relationships among lenders, but recent cases are proving otherwise. The conversation examines the legal and social factors fueling this trend, the role of lawyers in creating intricate transaction structures, and how courts and lenders are adapting, including the growing trend of cooperation agreements to address these challenges.