Case Law on Joint Negotiation by Creditors and General Antitrust Principles Provide Guidance for the Development of Cooperation Agreements
Cooperation agreements–agreements among a group of lenders to act collectively in the negotiation of a debt restructuring–are now a staple of lenders' preparation for restructuring events. Parties to a cooperation agreement often agree to support, vote for and consent to transactions in concert with one another, as long as they do not adversely affect the rights or interests of the parties.
Lenders argue cooperation agreements protect individual lenders by limiting each lender's ability to exploit loopholes in financing documents for the lender's own benefit at the expense of its fellow lenders. Excluded lenders argue they receive unfavorable terms in a workout between the borrower and members of the cooperative, with the co-op parties and borrower agreeing to bypass (or revise) credit provisions meant to safeguard minority rights. Borrowers
