Companies often look to various liability-management solutions—such as priming transactions and drop-down financings—to address their capital needs and avoid bankruptcy. Those structures, however, have been criticized as coercive, and often have resulted in a bankruptcy and continued litigation concerning their permissibility.
In an apparent reaction to this criticism, companies have begun to turn their attention to double-dip financings, which typically do not require the subordination of lenders or the transfer of collateral to unrestricted subsidiaries.
In an article for Reorg, partner Shai Schmidt takes a deep dive into the double-dip structure, exploring overlooked legal risks that haven’t yet been fully tested in litigation and that may significantly impact the efficacy of the structure.
Read the article here.
