Special Situations: Addressing Post-LME Protections In 2025

With liability management exercises (LMEs) and the requisite lender protections still a key focus for credit market participants as we enter a new year, the aftermath of a busy period of lender-on-lender violence, followed by the recent Serta decision, is driving a new conversation in relation to the documentation for post-LME credits.

Going into 2025, we are seeing much more trading in post-LME credits than was the case five years ago, when participating lenders tended to hold on to post-LME debt. Now that these credits are trading in the market (and in fact are often viewed as more attractive since investment decisions can be made on fundamental business analysis), there is an assumption that post-LME documents are less permissive and no longer contain the pitfalls that originally permitted LMEs.