Blog Post
Trinseo, LMEs and “the art of the possible” for out-of-court restructurings
Markets are navigating a crowded macro landscape. AI disruption. Higher energy prices. The Iran war. Against that backdrop, liability management exercises will remain a defining feature of the credit landscape.
LMEs can provide a lifeline. They buy companies the runway to fix operations, and sponsors can extract value from other creditors along the way. But they are not a fix. Unlike in-court restructurings, LMEs rarely address the underlying business problems.
Trinseo is the proof point. The company filed for bankruptcy last month with what amounted to a prepack in name only. Trinseo was among the first to use the pari-plus loan structure, with its September 2023 transaction that also dropped down its Americas Styrenics business. It layered on more complexity in early 2025 with a follow-on deal built on the 2023 framework.
Last month, the fight turned adversarial. Lenders excluded from both transactions sued to invalidate the 2023 deal and the 2025 exchange offer and moved to block the debtors’ disclosure statement.
The Trinseo litigation matters well beyond one company. Whether it goes to trial or settles, the outcome will define what is actually permissible in out-of-court restructuring.
That question will not stop sponsors and issuers from pursuing LMEs. Companies will keep using these tools to resize balance sheets, extend runway and access capital. Investors and their advisors need to understand every option available.
The Octus team has built a comprehensive map of the LME landscape, anchored by key transactions that illustrate the full range of strategies in play.
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