Equitable Subordination and Recharacterization of Loans: Avoiding Pitfalls for Lenders, Creditors, and PE Sponsors
Gary Kaplan is speaking on the Strafford live webinar, "Equitable Subordination and Recharacterization of Loans: Avoiding Pitfalls for Lenders, Creditors, and PE Sponsors."
This CLE webinar will offer best practices for counsel to lenders, creditors, and private equity sponsors to structure transactions and lending practices to protect their claims and maintain their priority status against junior and unsecured creditors or borrowers facing insolvency or bankruptcy.
Junior or unsecured creditors often assert equitable subordination and recharacterization claims against secured creditors in order to enhance recovery from highly leveraged debtors. When addressing the liquidity of their portfolio companies, PE sponsors are vulnerable to attacks on their claims.
Recharacterization claims usually involve insiders like stockholders, directors, and officers. However, the doctrine is not limited to corporate insiders, and courts will scrutinize both the debt instrument and the creditor's status.
Both doctrines are heavily litigated with recent cases that reflect the continued inconsistency among circuit courts and differing standards used among courts to scrutinize various loan transactions.
Listen as our authoritative panel of bankruptcy attorneys discusses the looming threats of equitable subordination and recharacterization in bankruptcy and how lenders, creditors, and PE sponsors can minimize exposure and protect their claims.
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