Lenders Beware: Expectations and Unintended Consequences

December 11, 2018

Over the last few years, there have been a series of cases where lenders have been unpleasantly surprised by transactions that borrowers have entered into which have increased the lenders’ risk, reduced assets available to repay debt, and changed the nature of the borrower’s business, while the borrowers have taken the view that the transactions are permitted under specific exceptions (the “baskets”) to the negative covenants in the credit documents.  J. Crew. Chewy, IHeart, Claire's...this article by Otterbourg partner David Morse examines these cases to see what lenders might learn.