Overview
During this session, panelists that focus on special situations and distressed debt in various sectors provided their insights on the current state of the financial market, recent restructuring trends, and tools to implement when faced with a distressed situation.
Session panelists:
- Eugene Fialkovskiy, Managing Director, King Street Capital Management
- Richard Klein, Senior Managing Director, Hilco Corporate Finance
- Dave Smith, Managing Director, Legacy Corporate Lending
- Laurel Wittman, Managing Director, Head of Special Situations, Oxford Finance
- Moderator: Kristin Going, Partner, McDermott Will & Emery
In Depth
- Rising Defaults Amid Economic Pressures May Continue Given Market Volatility
- Last year, a notable increase in defaults emerged, primarily because of interest rate pressure.
- Although borrowers have largely absorbed that pressure, the impact of tariffs has created new uncertainty.
- These factors have contributed to heightened market volatility, prompting closer scrutiny of debt markets.
- Shifting Dynamics in Credit Enforcement
- Traditional enforcement mechanisms have been weakened because of a lack of covenants in credit agreements, limiting the tools available to lenders.
- Private credit is becoming increasingly influential, reshaping the market by offering alternative funding and restructuring options.
- Coupled with the rise of private credit, the market has split between those managing distressed assets internally and those leveraging new avenues to offload risk.
- Unlike in the past, where lenders had to work through troubled credits, today’s environment offers exit strategies and secondary market solutions.
- Earlier Engagement and Speed Have Become Defining Characteristics
- More stakeholders are engaging earlier in the process to preserve value and influence outcomes.
- With earlier engagement, speed has become a defining feature as distressed change-of-control-transaction timelines have been cut in half, reflecting a more agile and opportunistic market.
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