How To Use Non-Contractual Rights To Influence A Restructuring Process

Co-authored by Milko Pavlov, Director, Houlihan Lokey

Depending on what type of restructuring is contemplated and the facts and circumstances of the case, there may be rights and remedies available to Junior Creditors in addition to contractual rights which arise from the credit documents. Instead of a "wait & see approach", these tactics will allow the minority Junior Creditors to proactively approach the company in order to be included in any restructuring negotiations.

The Pari Passu Principle

One of the fundamental principles of insolvency law is that all unsecured creditors in an insolvency process should share equally in any available assets of the company or any proceeds from the sale of any of those assets, in proportion to the debts due to each creditor.