Private Credit Restructuring Trends: No AAL, No Problem?

Bankruptcy Considerations for Unitranche Transactions with Super-Priority Revolvers without an AAL

Unitranche debt is not new to the private credit market. It has, however, evolved over time. In the earlier years of the private credit market, unitranche deals featured a single credit agreement with tranches of senior and subordinated term loans and a separate "agreement among lenders" (an "AAL") setting forth the relative payment priorities and, sometimes, differing economics, between the first out and last out lenders. More recently, most private credit facilities – although still often termed "unitranches" – no longer feature two senior and subordinated term loans. Instead, these senior secured unitranche deals commonly are comprised of a single senior term loan. Indeed, Proskauer's proprietary data shows that these first lien/unitranche structures account for 86% of Proskauer originated loans in 2022.