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ISSUE 99 | NOVEMBER 2024
Europe may swerve rise in creditor-on-creditor violence THE SMALLER size of European leveraged loan markets could protect lenders from being pitted against each other, as so-called creditor-oncreditor violence cases increase in the US. Creditor-on-creditor violence has come under the spotlight over the last year, with lenders being pitted against each other, essentially competing
to get a better claim on a borrower’s assets at the expense of others. This infighting can be a result of borrowers, in many cases sponsors, exploiting loopholes in debt agreements to raise new financing for their struggling portfolio companies. But it is a much more common occurrence in the US than in Europe,
according to Gijs de Reuver, managing director in Houlihan Lokey’s financial restructuring group. “One reason is that European directors are held to a higher standard of fiduciary duties generally than those in the US,” he said. “You would expect directors to show more resistance to what the shareholder
wants because they have other stakeholders’ interests to consider.” The second reason is the size of the capital markets. “It’s like living in London, people don’t know their neighbours and therefore care less what they do to their neighbours,” de Reuver added. “In Europe, capital markets are much smaller with fewer large >> 4