Lenders Choosing Cooperation Over Conflict; Minority No Longer Asleep at Switch, Says Andrew K. Glenn of Glenn Agre

By Gaurav Sharma

Recent trends in liability management exercises, or LMEs, suggest that lenders are increasingly opting for coordination rather than conflict, as creditor-on-creditor violence tends to be fraught with legal challenges, says Andrew K. Glenn, who heads the bankruptcy and restructuring group at Glenn Agre Bergman & Fuentes.

Glenn, whose firm has become known for organizing minority creditor groups, told Octus that LMEs are no longer defined only by “lender-on-lender violence” and that the market is moving “dramatically” toward “lender-on-lender coordination.”

“When LMEs first started, minority groups were often vulnerable to being exploited,” Glenn said.

He thinks minority lenders are no longer “asleep at the switch,” thanks to tighter creditor protections introduced in the aftermath of LMEs executed by Serta Simmons and Wesco Aircraft that impaired a group of creditors in the capital structure.

“People understand that there are fewer and fewer avenues for them to kind of exploit the minority. And so, given that dynamic and given the fact that the sponsor, the majority group and the company have so much to lose if a case goes to litigation, things are trending toward a more kind of orderly approach,” Glenn said.

“The majority group gets a baseline of economics, and the minority groups get a small decrement below those economics,” he added.

He said he believes that a litigation threat looming in the background is a deterrent.

“If you try to take too much from the minority, there’s going to be litigation, and that creates downside for everybody,” he further added.

Glenn pointed out that cooperation agreements have played a pivotal role in providing minority lenders with leverage in complex liability management transactions.

“You absolutely need a cooperation agreement so that the minority group remains cohesive. The bigger the minority, the more urgency that the company has to fold in the minority because there’s more risk to the company with a bigger holdout where the objective is to capture discount.”

The economics of the transaction also matter. Litigation can cost $10 million to $20 million, which can exceed the value companies hope to extract from sidelined creditors, Glenn opined.

Court decisions in cases such as Cineworld Group and Core Scientific, wherein courts ruled that proposals from minority lenders cannot be put on the back burner, have emboldened minority lenders.

Still, Glenn said that he expects LMEs to remain a key restructuring tool, though they may perhaps become less confrontational.

Brightline Florida

Brightline Florida noteholders have signed nondisclosure agreements in preparation for a potential debt restructuring, with discussions reportedly focusing on an out-of-court solution. Brightline Florida’s complex capital structure involves significant debt obligations that are a mix of secured and unsecured paper, with high-yield corporate and high-yield municipal bond investors. Octus’ coverage of Brightline Florida is HERE.

QVC Group

QVC Group, a publicly listed home television shopping network, is considering filing for a prepackaged chapter 11 bankruptcy by the end of the month. QVC is working with Kirkland & Ellis, Evercore and AlixPartners on potential restructuring, and certain creditors are advised by Davis Polk and PJT Partners. The company’s third-quarter 2025 adjusted operating income before depreciation and amortization dropped 32.4% year over year, attributed to challenging tariff, viewership and macroeconomic conditions. Octus’ coverage of QVC Group is HERE.

Kennedy-Wilson Inc.

Creditors holding a majority of Kennedy Wilson’s debt due in 2029 and 2031 have signed a cooperation agreement to abstain from the company’s recent tender offer. The exchange offer is part of a broader strategy that includes consent solicitations to amend the indentures governing the existing notes, requiring majority approval from noteholders. This transaction is connected to a proposed acquisition of Kennedy-Wilson Holdings Inc. by a consortium led by William McMorrow and Fairfax Financial Holdings Ltd. Octus’ coverage of Kennedy-Wilson Inc. is HERE.

Ingenovis Health

Ingenovis Health has amended its $85 million revolving credit facility and extended the maturity date to Thursday, March 19, from Saturday, March 14. Ingenovis Health’s liquidity is supported by an $85 million accounts receivable facility that was extended last summer by Sixth Street. The company’s first lien term loan due in 2028 has seen an increase in its trading levels since January. Octus’ coverage of Ingenovis Health is HERE.

Oldcastle BuildingEnvelope

An ad hoc group of lenders to OldCastle BuildingEnvelope has hired PJT Partners as investment bank and is working with Milbank as legal advisor. A separate group of creditors to OldCastle BuildingEnvelope is working with Davis Polk as legal advisor. The building products company is contending with ongoing performance deterioration. Octus’ coverage of OldCastle BuildingEnvelope is HERE.

SonicWall

An ad hoc group of minority lenders holding approximately $100 million of SonicWall’s term loan due in 2028 is working with Cadwalader Wickersham & Taft amid ongoing negotiations for a liability management exercise with the cybersecurity firm. SonicWall, backed by Francisco Partners, is experiencing significant financial challenges: Its term loan prices dropped from 86.25 to 31.21 over three months, and Moody’s downgrading its rating because of expected liquidity and performance declines. The company has been heavily reliant on its revolving credit facility to cover cash flow deficits, and its liquidity profile remains weak. Octus’ coverage of SonicWall is HERE.

Dexko

DexKo Global has initiated a $3.2 billion amend and extend transaction, facilitated by UBS, which involves tighter documentation and added liability management protections. The transaction will extend the company’s term loans to October 2031 and unsecured bonds to April 2032, while offering a 75 bps premium over existing debt. An ad hoc group, organized with Gibson Dunn, successfully negotiated better terms with sponsor Brookfield, including a higher extension fee for certain lenders. Following the transaction’s launch, DexKo’s net leverage is expected to rise slightly, and annual cash interest will increase. S&P Global Ratings affirmed its B- issuer credit rating for the company. Octus’ coverage of Dexko is HERE.

Raízen

On Thursday, Brazilian sugar, ethanol and bioenergy producer Raízen SA and eight affiliates filed chapter 15 petitions in the Southern District of New York seeking recognition of the company’s Brazilian recuperação judicial, or RJ, proceeding, as a foreign main proceeding. The debtors seek recognition to aid their Brazilian restructuring efforts and protect their property from creditor actions in the United States.

Also on Thursday, the São Paulo Third Bankruptcy and Insolvency Court authorized the commencement of the RJ proceeding and granted a 180-day stay on all enforcement actions and payment obligations relating to covered claims. The ruling is among the first to validate a tactic in which a Brazilian corporate debtor files a recuperação extrajudicial with a placeholder plan without pre-agreed economic terms. Octus’ Raízen coverage is HERE.

FAT Brands Inc.

On Thursday, the FAT Brands debtors moved for court approval of bidding procedures for substantially all assets. Qualified bids would be due April 24, and an auction and sale hearing would be set for April 28 and May 1, respectively. The debtors say they expect to file a DIP financing motion with sale milestones ahead of a March 17 hearing as they continue mediation with the WBS noteholder ad hoc group and unsecured creditors committee. Octus’ FAT Brands coverage is HERE.

First Brands Group LLC

Today, March 13, the First Brands debtors announced they made “great progress” in negotiations over a case settlement. Judge Christopher Lopez also approved the auto parts supplier’s sale of their Walbro business to Overdrive Capital LLC for an aggregate purchase price of $50 million in cash plus certain assumed liabilities. Overdrive Capital is an entity owned and operated by common shareholders and officers of the Active Dynamics Group, with Polaris Industries Inc. serving as guarantor.

At a hearing on Thursday, March 12, Judge Lopez directed the debtors to return $25.7 million of cash to their factored receivables account from their general operating account by March 19, granting Evolution Credit Partners’ motion for adequate protection of its $60.5 million receivables claim. Additionally, the U.S. government moved to stay discovery in the debtors’ adversary suit against former CEO Patrick James while the federal criminal case against James moves toward a July trial. Octus’ First Brands Group coverage is HERE.

ModivCare / Bankruptcy Industry Update

Last week, the reorganized ModivCare debtors objected to the final fee applications of White & Case and AlixPartners, firms that advised the official committee of unsecured creditors in the healthcare services company’s chapter 11 cases. ModivCare seeks to knock out about $19.2 million of requested fees and expenses, making the unusual argument that White & Case excessively billed the estates as a litigation strategy.

ModivCare argues White & Case indicated it would pursue a “scorched earth billing” strategy if the debtors did not concede to the UCC’s demands. ModivCare’s briefing does not include any case where a UCC’s advisors’ fees were denied on the basis that the advisor pursued a litigation-heavy case strategy with the aim to extract settlement value for its constituents. Octus’ ModivCare coverage is HERE, and Bankruptcy Industry Update coverage is HERE.

Ligado Spectrum Takings Suit

The Federal Circuit remanded Ligado Networks’ multibillion-dollar spectrum takings suit against the U.S. government to the U.S. Court of Federal Claims. At issue was the government’s interlocutory appeal of the trial court’s denial of the government’s motion to dismiss. The appeals court declined to rule on the core dispute of whether Ligado’s Federal Communications Commission spectrum license amounts to a property right under the takings clause of the Fifth Amendment. The appeals court reasoned that the parties’ takings arguments were presented at “at too high a level of generality” for it to evaluate and remanded the matter to the lower court for further consideration. Octus’ coverage of Ligado is HERE.