Shearman & Sterling LLP multinational law firm headquartered in New York City, United States.

News Apr 29, 2014

Thompson Quoted in International Financial Law Review (IFLR) on Covenant-lite Boom

Co-head of Global Finance Joshua Thompson was quoted in a story, “Cov-lite boom prompts insolvency concerns” in International Financial Law Review (IFLR). The story discusses the increasing prevalence of covenant-lite deals, including term loan B loans financings, outside of the US market. This trend, driven in part by investors’ appetite for higher yield, is creating concerns about borrower insolvency in Europe where insolvency regimes are different from the US. According to Thompson, "In the US, the term loan B market is both deep and mature. The relatively recent trend has been the deployment of this product in jurisdictions where the insolvency laws are materially less favorable to creditors than the US bankruptcy code.” Thompson also notes that "The on-going challenge is to modify the term loan B product to be appropriately tailored and adapted to these non-US legal environments."