O’Melveny & Myers Discusses Predatory Priming

Priming transactions have been increasing in frequency during the current pandemic restructuring cycle.  Priming usually involves the debtor shifting collateral and assets away from their core lending group to support new tranches of debt that are structurally or directly senior to their existing lenders.  Holders who are not included in the priming tranche are left with their investments further underwater and their restructuring options more limited if the priming “fix” doesn’t turn the debtor’s business around.  Some priming transactions have recently become more aggressive and involve a subset of lenders rigging a majority to improve their positions over minority lenders.  … Read more