About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

73 Duke L.J. Online 1 (2023-2024)

handle is hein.journals/duljo73 and id is 1 raw text is: Duke Law Journal Online VOLUME 73 OCTOBER 2023 CREDITORS STRIKE BACK: THE RETURN OF THE COOPERATION AGREEMENT SAMIR D. PARIKHT ABSTRACT In the low interest rate environment that followed the Great Recession, a fanatical demand for high-yield investments provided private equity firms an opportunity. Newfound borrower leverage facilitated credit documents with few creditor safeguards and various loopholes. Borrowers subject to these sponsor-favorable terms now had options in times of financial distress. More specifically, they had the option to strike first. Utilization of coercive exchanges began in earnest around 2015 and has since flourished. Unmonitored portfolio companies experiencing financial distress now regularly rely on questionable interpretations of ambiguous contractual provisions to surreptitiously move assets away from creditors' collateral baskets and subordinate lenders. These unprecedented acts of financial war are pure, self-interested behavior designed to seize and redistribute value. Creditors in this multiplayer prisoner's dilemma have two choices: (i) cooperate with its creditor group and attempt to prevail by securing a majority coalition, or (ii) defect and work with the borrower who promises to share some of the spoils of victory. Scholars have thoroughly detailed private equity's plan of attack. But what is missing is an exploration of creditor countermeasures to these new coercive exchanges. This Essay attempts to conceptualize the Copyright © 2023 Samir D. Parikh. t Professor of Law, Lewis & Clark Law School. For helpful comments and conversations, I am grateful to Ken Ayotte, Bruce Bennett, Vince Buccola, Elisabeth de Fontenay, Evan Fleck, Max Frumes, Scott Greenberg, Chris Guhin, Kris Hansen, Sujeet Indap, Dan Kamensky, Ken Liang, Billy Organek, Bob Rasmussen, and Isaac Sasson. Finally, I thank my family for their unwavering support.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most