Public Companies Are Increasingly Taking LME Route, Says Houlihan Lokey’s Surbhi Gupta 

By Gaurav Sharma

Public companies are increasingly resorting to using liability management exercises, or LMEs, even when their operational issues remain unresolved, a tactic that has been primarily employed by private equity-backed issuers, says Surbhi Gupta, managing director in Houlihan Lokey’s financial restructuring group.

Gupta, who has experience in a wide variety of engagements, including both chapter 11 and out-of-court restructurings, said the number of public companies going the LME route will likely grow in 2026.

“You’re seeing public companies in the U.S. also pursue liability management transactions as a part of their strategic alternatives tool kit,” Gupta said in an interview. “You might assume, ‘This is a more traditional public company board. They may be reticent to go the aggressive route.’ But that doesn’t prove to be the case.”

Gupta views this trend as an extension of the norm, where LMEs may have only been in the toolbox of sponsor-backed companies, with public-company boards now actively evaluating similar transactions, often prioritizing maturity runway over more fundamental balance-sheet solutions.

Gupta cites the recent LME executed by publicly listed copier and printer maker Xerox as an example, along with other companies that did a transaction last year, such as Claritev, fka Multiplan.

“Look at what happened with Xerox, which was very creative,” she said. “They raised substantial third-party capital. There were very sophisticated hedge funds in the capital structure, who missed the opportunity to engage with the company.”

Gupta highlights that Xerox’s ability to raise capital from the likes of TPG Credit is a testament to the fact that publicly traded companies are using the LME playbook.

“You go and get [TPG] to raise [money] into this funky structure, and you’ve now got a whole lifeline of new liquidity,” she said.

She noted, however, that the transaction is likely not a long-term fix for Xerox.

“Pro forma for the transaction, the debt still trades at a substantial discount to par, and you’ve got a ’28 maturity,” she said. “The market is suggesting that refinancing the ’28 maturity with debt trading at those levels will be difficult. Despite all that, they still moved forward with the transaction.”

“Weight Watchers is another example of a public company that decided to reorganize and delever proactively; similar to private equity-backed businesses, in that instance, we saw a public company take a good, hard look at its balance sheet and the time it would take to turn around the business.”

Like Xerox, said Gupta, there will be other public companies exploring liability management options in 2026, reinforcing the view that public companies are increasingly adopting LMEs.

“It’s not talked about as much, but it is definitely here.”

Americas Court Opinion Review

In the latest installment of the Court Opinion Review, we discuss the reorganized ModivCare debtors’ objections to UCC advisors’ fees, a curious chapter 15 finding in Xinyuan Realty, decisions on opt-out releases and venue in United Site Solutions and Multi-Color, and the collapse of the Tehum Care two-step plan. Read the Court Opinion Review HERE.

SonicWall

SonicWall, a cybersecurity company backed by Francisco Partners, is said to be moving closer to a pro rata liability management exercise that could help it secure new capital. The company had about $800 million in term loan debt outstanding as of Oct. 31 that matures in the first half of 2028 and a revolver expiring in February the same year. Octus’ coverage of SonicWall is HERE.

Medical Solutions

Medical Solutions is reportedly nearing a non-pro-rata liability management exercise. In late November, Arini Capital Management acquired a significant position in the medical staffing company’s term loan under an old cooperation agreement among lenders and then supported a new tiered cooperation system when the old one expired. At roughly the same time, Apollo Global Management sold a substantial portion of its loan holdings prior to the drafting of the new agreement. The pivot to a tiered treatment among lenders occurred in September 2025. Octus’ coverage of Medical Solutions is HERE.

EchoStar

EchoStar has reached a restructuring support agreement with noteholders representing over 82% of DISH DBS debt securities holders, which addresses the company’s pay-TV subsidiaries that had approximately $14 billion of indebtedness outstanding and resolving its nearly two-yearslong noteholder litigation. The quantum of currently nonparticipating minority noteholders could complicate fully executing the RSA out of court. However, to the extent that an in-court option is necessary, the RSA’s consenting creditors represent at least 73% of principal amount in each of the DDBS notes issuances, facilitating execution of the RSA, which would maintain EchoStar’s equity interest in DDBS, in court. Octus’ coverage of EchoStar can be found HERE.

Foundever

Foundever, a U.S.-based call center operator formerly known as Sitel, is nearing the launch of a liability management exercise after certain large lenders signed nondisclosure agreements to review a proposal from the company and its advisors. The company has been in ongoing discussions with lenders since last summer while in August representatives of the lenders rejected an LME proposal from the company and its advisors. Foundever reported a 2% year-over-year increase in EBITDA for the fourth quarter of 2025, despite a 4.2% decline in revenue. Octus’ coverage of Foundever is HERE.

New Fortress Energy

New Fortress Energy announced a restructuring support agreement with a majority of its creditors that would effectively spin off its Brazilian operations into a new entity called BrazilCo, which will be primarily owned by holders of NFE Financing’s 12% senior secured notes due 2029. The remaining operations will be held by a new entity, CoreCo, with NFE’s lenders receiving 65% of the reorganized equity, while existing NFE equityholders will receive 35%. The restructuring will be implemented through a U.K. scheme, with plans to seek recognition in the U.S. under chapter 15 of the Bankruptcy Code. Octus’ coverage of New Fortress Energy is HERE.

Saks Global Enterprises

Saks Global Enterprises is asking market participants for their interest in funding the luxury retailer’s exit ABL facility, currently modeled at $1.5 billion paying SOFR+225 bps. The company is seeking proposals until March 20. Saks filed for chapter 11 at the beginning of the year with a $1.75 billion DIP commitment from existing lenders following persistent vendor and liquidity issues. The company has also announced footprint rationalization plans that would cut its full-line store count by a third while eliminating the vast majority of its off-price stores as it aims to reduce occupancy costs that had an annual run rate of over $400 million as of the petition date. Octus’ coverage of Saks Global Enterprises is HERE.

West Technology Group LLC

Lenders to privately held West Technology Group have sought advice from Gibson Dunn as the provider of technology-enabled communications services faces upcoming debt maturities amid ongoing operational pressures. The company underwent a recapitalization in 2022, using the proceeds of a $2.4 billion sale of its safety business to pay down debt and push out maturities. At that time, Gibson Dunn advised term lenders on the amend-and-extend transaction. Octus’ coverage of West Technology Group is HERE.

Alight Inc.

An ad hoc group of lenders to Alight is working with Davis Polk as legal advisor to prepare for engagement with the company about a capital structure fix, potentially involving a liability management exercise. Alight is consulting with Simpson Thacher to explore balance sheet options, including an LME, as the company faces financial challenges. Alight’s $2 billion term loan has come under pressure recently owing to its poor first-quarter guidance in combination with weakness in the wider software industry. Octus’ coverage of Alight is HERE.

Cast & Crew

An ad hoc group of lenders to privately held Cast & Crew that is working with Davis Polk recently retained Houlihan Lokey as financial advisor. Octus’ coverage of Cast & Crew is HERE.

Domtar

Domtar is working with Latham & Watkins as legal advisor as the pulp and paper company struggles with challenging end markets and high leverage. Meanwhile, an ad hoc group of lenders to Domtar Corp. is collaborating with Davis Polk and Perella Weinberg Partners because of concerns about the company’s performance. Octus’ coverage of Domtar is HERE.

Lycra Co.

On March 17, fiber solutions company The Lycra Co. filed chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas with prepackaged debt that the company says would eliminate $1.2 billion of long-term debt. The debtors say 100% of the super senior term lenders and more than 90% in amount and 50% in number of both the euro and dollar note and promissory note holders support the RSA.

Judge Christopher Lopez granted interim access to $50 million of a $75 million DIP facility at the March 17 first day hearing, overruling an objection from minority noteholder CastleKnight, which had submitted a competing DIP proposal. The judge scheduled the second day hearing for April 10 and the combined final DS approval and plan confirmation hearing is scheduled for April 24. Octus’ Lycra coverage is HERE.

Multi-Color Corp.

In a ruling on Oct. 16, Judge Michael Kaplan denied the U.S. Trustee and the Multi-Color ad hoc cross-holder group’s motions to dismiss or transfer the chapter 11 cases out of New Jersey. The ruling bolsters Multi-Color’s campaign to confirm its chapter 11 plan, which is supported by the secured ad hoc group and opposed by the cross-holder group.

The judge found that the principal assets of the first-filed debtor MCC-Norwood are its New Jersey bank accounts, rejecting the cross-holders’ view that the entity lacks connections to the state. Judge Kaplan said it does not “sit right” with him that the bank accounts were clearly opened so Multi-Color could file in New Jersey, but this is the “situation intentionally created by Congress” when it drafted a broad venue statute. Octus’ Multi-Color coverage is HERE.

FAT Brands Inc.

Judge Alfredo Perez granted interim approval of the FAT Brands debtors’ DIP facilities from the ad hoc group of securitization noteholders at a hearing on March 19 after the parties resolved objections by residual securitization noteholder 3|5|2 Capital and manager entity professionals Pachulski Stang and Steptoe. The judge also approved a related governance settlement resolving the securitization noteholder group’s motions to remove the debtors’ CEO.

The DIP objections highlighted potential conflicts between the manager entity debtors (the parent companies that oversee the debtors’ operations) and the securitization entity debtors (the entities that collect franchise fees and other revenue and pay the amounts due noteholders under the debtors’ four operating securitization facilities). According to Pachulski Stang’s objection, the manager entities assert a $255 million claim against the securitization entities. Octus’ FAT Brands coverage is HERE.

Del Monte Foods Inc.

At a hearing on March 18, Judge Michael Kaplan conditionally approved the Del Monte Foods debtors’ disclosure statement, overruling an objection from a group of minority lenders. The judge also took under advisement the DIP lenders’ motion to dismiss the minority lenders’ DIP rollup lawsuit and also recommended the parties consider mediation.

The minority lender plaintiffs argue that the approximately $247 million of rollup DIP loans that the DIP lenders received in connection with providing $165 of new-money DIP loans is actually a “payment” or “reduction of debt” that must be shared pro rata under section 2.17 of the credit agreement. However, the DIP lender defendants say the DIP rollup was a “cashless exchange,” not a “payment” subject to the sharing provision. Octus’ Del Monte Foods coverage is HERE.

SDTX Judicial Conduct Coverage

Judge Eduardo Rodriguez conducted a three-day trial on Jackson Walker’s proposed settlements with estate representatives of nine bankruptcy cases where the law firm served as debtors’ counsel. In exchange for cash payments, the estate representatives agreed to drop their claims tied to Jackson Walker’s failure to disclose its conflict of interest caused by the secret romance between former partner Elizabeth Freeman and former judge David R. Jones.

For months, the U.S. Trustee opposed the settlements, accusing Jackson Walker of using its deals with estate representatives to obstruct the UST’s litigation to claw back some $20 million of professional fees from the firm for failure to disclose its Jones-Freeman conflicts. However, the UST and the firm resolved the objections in a stipulation protecting their rights in the fee clawback litigation. Octus’ SDTX Judicial Conduct Coverage is HERE.

Starz Excluded Noteholders Suit

New York Supreme Court Justice Joel M. Cohen denied Starz Entertainment’s motion to dismiss excluded noteholders’ claim that a 2023 spinoff and non-pro-rata bond swap violated their “sacred right” to consent to amendments that “modify the form of the Notes Guarantee in [a] manner adverse to the Holders” or release guarantors “constituting all or substantially all of the value of the Notes Guarantees.” The judge also denied sponsor Eagle Equity’s motion to dismiss the excluded noteholders’ tortious interference claims. However, Justice Cohen dismissed the plaintiffs’ other sacred rights claims, their good faith and fair dealing claims and their breach of contract claims against the participating noteholders and indenture trustee. Octus’ coverage of Starz is HERE.

Nexstar, Tegna FCC Approval

Nexstar closed its acquisition of Tegna after receiving approval from the Federal Communications Commission and the U.S. Department of Justice. The FCC’s media bureau granted the companies’ request for waiver of the 39% national broadcast television ownership cap. FCC Chairman Brendan Carr said waiver of the 39% cap was appropriate given the “media marketplace that exists today – not the one from decades past.” DirecTV on March 20 asked a court to issue a temporary restraining order halting Nexstar and Tegna from combining operations. Octus’ coverage of Nexstar is HERE.