Orrick’s D’Aversa, Ross Discuss Revolver Lender Considerations in LME Transactions

By Harvard Zhang

To achieve the optimal outcome in a liability management exercise and a subsequent restructuring, revolver lenders will be best positioned if they organize early and act cohesively, according to Raniero D’Aversa, chair of Orrick’s restructuring group.

Important considerations for revolver lenders include elevated seniority in the post-LME capital structure, maturity and financial covenant protections, revolver voting rights expansion, ancillary secured obligations, and the ability to participate in a DIP in a subsequent restructuring, among others, according to D’Aversa and Adam Ross, a banking & finance partner at Orrick.

Revolver loans have also become an investment opportunity for distressed funds, which may be harder negotiators with different expectations of returns than commercial banks, D’Aversa and Ross said.

“Revolver lenders’ relationships with private equity sponsors can be a great advantage and a disadvantage, considering the broader commercial exposure like cash management services and loans to their other portfolio companies,” D’Aversa said. “We would generally advise our clients to not delay engaging with the borrowers and the sponsors, and having a cooperation agreement among revolver lenders makes it harder for revolver lenders to be sidelined.”

Since a stressed or distressed issuer usually spends a significant amount of time negotiating LME terms with its term lenders and bondholders as well as other potential liquidity sources, it is important for revolver lenders to shortlist their asks and be intentional about revolver-specific requests in addition to those that align with other creditors’ proposed terms, Ross said.

“A vast majority of what revolver lenders want is in line with what ad hoc creditor groups want, and where the interests diverge is, for example, when revolver lenders’ votes do not constitute a majority, expanding revolver-only class voting to ensure they are at the table negotiating a subsequent restructuring becomes a priority,” he added.

“For considerations in a later bankruptcy, revolver lenders want to be able to participate in a DIP and limit the amount that could roll up ahead of them or allow them to roll up their loans on a pro rata basis,” D’Aversa said. “We have seen fully negotiated LME terms that may limit the ability to assert administrative claims or the ability to assert adequate protection rights – items traditionally in the domain of the bankruptcy judge but are now baked into LME deals. So revolver lenders definitely want to be there early, be important, and be heard when that happens.”

In addition, Ross said, “revolver lenders need to carefully review LME documentation to ensure that letter of credit, hedging, foreign exchange, cash management and other ancillary secured obligations, which tend to be less of a priority for ad hoc groups, are protected in the post-LME structure.”

The Bankruptcy Quarterly

The latest edition of The Bankruptcy Quarterly reviewing the first quarter of 2026 is out. The article covers developments in bankruptcy law over the last three months and data-based insights into companies that filed for chapter 11 or confirmed a chapter 11 plan during the quarter. Highlights include litigation over pro rata sharing covenants in Del Monte and Serta, the contentious Multi-Color cases and a major decision in the long-running case of the Puerto Rico Electric Power Authority denying bondholders a $3.7 billion administrative expense priority claim. Read the Bankruptcy Quarterly HERE.

Internet Brands

Internet Brands sponsor KKR has warned certain lenders against organizing with advisors to avoid jeopardizing access to future deals. Despite Internet Brands’ revenue and adjusted EBITDA growth in the fourth quarter of 2025 and guidance for improvement in these metrics for fiscal year 2026, concerns over AI disruption and upcoming debt maturities are causing investor anxiety. The company’s term loan prices have dropped due to these fears, particularly after the launch of a new AI chatbot by OpenAI targeting healthcare sectors. Internet Brands operates digital marketing services across various sectors, including healthcare and legal, through brands such as PulsePoint, MedScape and WebMD. Octus’ coverage of Internet Brands is HERE.

PLZ Corp.

PLZ Corp. told its lenders that it is seeking to refinance its existing debt through private credit. The PPC-backed producer of spray products faces the expiration of a $100 million RCF on April 30 and has over $1 billion in first lien term loans maturing on Aug. 3. Moody’s Ratings downgraded PLZ in October because of high financial leverage and weak cash flow, citing subdued demand and restructuring costs. An ad hoc group of lenders, with Akin Gump as legal advisor, organized in December 2025 to discuss a potential amend-and-extend transaction. Octus’ coverage of PLZ Corp is HERE.

Ingenovis Health

Ingenovis Health has proposed a restructuring deal to its lenders involving a preferred equity contribution of $100 million to $150 million from its sponsors and a significant haircut for lenders, with the haircut expected to be around 40 to 50 cents on the dollar. For the remainder, they have been offered to receive about 15 cents in cash with the remaining balance to be exchanged for take-back debt maturing in 2031 with an interest rate of SOFR+500 bps. The restructuring aims to reduce Ingenovis’ debt by approximately $500 million, with over 60% of lenders supporting the deal. Octus’ coverage of Ingenovis Health is HERE.

Cornerstone Building Brands Inc.

Cornerstone could generate mid-cycle revenue of approximately $5.9 billion and adjusted EBITDA of approximately $710 million, based on its historical earnings pro forma seven of the nine acquisitions and all three of the divestitures completed since 2021. This compares with current revenue of $5.4 billion and adjusted EBITDA of $451 million for the full-year 2025, which we believe is near a cyclical bottom. Because the company is facing a $5 billion debt maturity wall looming in 2028, we do not expect that it has the runway it will need to realize the upside in its results that would be required for a refinancing. Octus’ coverage of Cornerstone Building Brands can be found HERE.

Accendra Health

Accendra Health, fka Owens & Minor, is working with Kirkland & Ellis as legal counsel and Ducera Partners as a financial advisor as it evaluates capital structure options. This follows the sale of the company’s P&HS segment and the Owens & Minor brand to Platinum Equity for $375 million at the end of last year and comes as the company faces a March 2027 maturity for its term loan A. The sale presents an opportunity for Accendra to optimize its capital stack as it transitions to a higher-profit, better-cash-flow business model. Octus’ coverage of Accendra Health is HERE.

Jeld-Wen

Jeld-Wen, a manufacturer and distributor of windows and doors, is working with Kirkland & Ellis as counsel amid operational challenges and an impending maturity wall in December 2027 and July 2028. Octus reported previously that an ad hoc group of term loan lenders were working with Gibson Dunn over performance concerns. The company’s financial performance has been declining with the company reporting a 10.5% year-over-year revenue decline for the fourth quarter, driven by an 18.4% drop in its North American segment, while highlighting expectations for a 5% to 10% organic revenue decline for 2026 assuming no improvement in end markets. Management is exploring strategic options to improve liquidity, including the sale of its European business and noncore asset divestitures, while also focusing on reducing leverage. Octus’ coverage of Jeld-Wen is HERE.

Symplr Software Intermediate Holdings Inc.

An ad hoc group of lenders to Symplr Software is working with Houliahan Lokey as financial advisor as it deals with its near-term maturity wall, which includes a $100 million RCF expiring in September 2027, and first and second lien term loans totaling over $2 billion due in December 2027. Backed by Charlesbank Capital Partners and Clearlake Capital, the company has been active in the capital market over the last year. Octus’ coverage of Symplr is HERE.

Crédito Real

On March 31, U.S. District Court Judge Colm Connolly affirmed Delaware Bankruptcy Judge Thomas Horan’s decision to grant chapter 15 recognition of Crédito Real SAB de CV’s Mexican concurso mercantil and prepackaged plan. Judge Connolly specifically upholds U.S. enforcement of the nonconsensual nondebtor releases in the Mexican plan, finding that they do not violate the U.S. Supreme Court’s Purdue Pharma decision.

“U.S. bankruptcy courts can give effect to foreign orders in recognized foreign proceedings pursuant to the authority granted in Chapter 15, even when those orders contain relief unavailable under U.S. law,” Judge Connolly concludes. Octus’ Credito Real coverage is HERE.

Ligado Networks / Viasat Inc.

At a hearing on March 30, Judge Thomas Horan granted the Ligado debtors’ motion to delay a $100 million cure payment due on March 31 to Viasat affiliate Inmarsat under the parties’ chapter 11 settlement. Judge Horan directed Ligado’s spectrum partner AST & Science to transfer the $100 million to Ligado by March 31, and for Ligado to hold the funds in an interest-bearing escrow account instead of paying them to Inmarsat, until the plan goes effective or the court enters a further order.

The judge agreed with Ligado and AST that Inmarsat violated the chapter 11 settlement by suing in New York state court and filing a petition with the Federal Communications Commission opposing Ligado’s application for the SkyTerra Next satellite system, although both Inmarsat’s lawsuit and petition to deny have now been withdrawn. Ligado alleges its damages from Inmarsat’s breaches total over $100 million. Octus’ Ligado coverage is HERE.

Luminar Technologies

Judge Christopher Lopez confirmed the Luminar Technologies chapter 11 liquidating plan at a hearing on April 1, overruling an objection from the U.S. Trustee. Judge Lopez said his ruling conforms to the U.S. District Court for the Southern District of Texas’ Feb. 13 Container Store decision, which held that no-recovery nonvoting classes deemed to reject that plan were not bound by its opt-out nondebtor releases.

Judge Lopez rejected the UST’s bid to remove Class 5 general unsecured claims from the Luminar plan’s opt-out nondebtor releases, saying that these GUCs are receiving “1% with potential upside” in contrast to creditors receiving no recovery under the Container Store plan. The result might be different, he suggested, in cases where the distribution is so “small” that he could be persuaded to say “no” to opt-out nondebtor releases. Octus’ Luminar coverage is HERE.

CaaStle C&O Litigation

George L. Miller, the chapter 7 trustee in the CaaStle bankruptcy case, sued former CaaStle CEO Christine Hunsicker, two former CaaStle directors and several former CaaStle officers, accusing Hunsicker of repeatedly fabricating financial statements “to obtain investments under false pretenses” – a pattern of misconduct enabled by the “complacency” and “willful blindness” of the defendant officers and directors. The complaint, filed on March 27, asserts that this “complete abandonment” of fiduciary duties led to approximately $300 million in damages to investors and the bankruptcy of a “once-promising” company. Octus’ coverage of CaaStle is HERE.

401(k) Alternative Asset Rule

The U.S. Department of Labor released a notice of proposed rulemaking implementing President Donald Trump’s August 2025 executive order directing federal agencies to take steps to allow defined contribution plans, including 401(k) retirement plans, to invest in alternative assets, such as private equity, private credit, real estate, infrastructure investments and cryptocurrency. Octus’ coverage of the proposed rule is HERE.

Rocket Cos Homebuyer Class Action

The Rocket Cos. moved to dismiss a homebuyer class action alleging agents illegally steered clients to its mortgage arm because the plaintiffs failed to allege cognizable injury under the Real Estate Settlement Procedures Act, or RESPA, and the claims fall outside the one-year statute of limitations. Octus’ coverage of Rocket is HERE.

Unit Corp Plan Warrant Litigation Release Appeal

U.S. District Judge George C. Hanks Jr. affirmed an October 2024 ruling that the Unit Corp. plan of reorganization’s releases do not prevent the holders of plan warrants from suing over undisclosed post-confirmation, preeffective-date new warrant agreement modifications. Judge Hanks finds that although the plan’s reservation of the debtors’ right to modify plan documents preeffective date may be a defense to such claims, it does not bring the claims within the plan’s releases. Octus’ coverage of Unit Corp. is HERE.