U.S. Liability Management Transactions: Quarterly Update Through Q2 2025
Ian Feng, J.D. - Senior Covenant Analyst, Covenant Review
9 July 2025
Insights into the evolving landscape of U.S. liability management transactions through Q2 2025鈥攅xploring key trends, structural innovations, legal developments, and market impacts shaping corporate debt restructuring:
- Quarterly Trends in U.S. Liability Management Transactions: Analyze the latest data and insights on transaction activity, structural complexity, and leading sponsors driving LMTs in 2025.
- Structural Innovations and Deal Types: Understand new developments in double-dip, drop-down, and uptier transactions, with clear explanations of how these strategies are reshaping liability management.
- Litigation and Regulatory Landscape: Stay updated on significant court cases, regulatory shifts, and the ongoing impact of the Serta decision on future LMT structuring.
- Post-LMT Recovery Rates and Outcomes: Examine recovery data for creditors post-bankruptcy, highlighting the differences between in-group and out-group lender outcomes after liability management transactions.
- Blocker Provisions and Investor Protections: Learn how evolving blocker provisions are being used to counter aggressive LMT tactics and what investors should monitor in new U.S. liability management transactions.
The Bottom Line 鈩笍
- In this regularly released report, we provide a summary of key Liability Management Transaction (LMT) trends in the second quarter of 2025.
- We also provide brief descriptions of the most common structures of LMTs, along with visual representations of these structures. We also comment on related 鈥渂locker鈥� provisions.
- We discuss ongoing litigation and bankruptcy matters relating to LMTs.
- Finally, we provide a list of LMTs that have been tracked by Covenant Review and LFI since 2013, through the second quarter of 2025.
Overview
Whether called 鈥渃reditor-on-creditor violence,鈥� 鈥渄istressed exchanges,鈥� or 鈥渙ut-of-court restructurings,鈥� Liability Management Transactions (LMTs) have played host to an ever-escalating arms race of gamesmanship between and among creditors and borrowers. Indeed, over the course of the past several years, distressed companies have demonstrably proved a willingness to pursue alternatives to capital restructuring outside of the traditional bankruptcy mechanisms. The number of LMTs in the United States has increased dramatically, particularly since 2020鈥攚ith 2024 representing a new high watermark in many respects. The first two quarters of 2025 have largely continued this trend, despite some market prognosticators prematurely predicting a pullback after the Fifth Circuit鈥檚 New Year鈥檚 Eve decision on Serta, with the numbers on track to surpass even 2024. Insights since 2013, including both public and known private transactions. This report is updated on a quarterly basis and is primarily focused on transactions with a material US nexus.
In this report, we also provide additional details for LMTs that were either launched or completed through Q2 of 2025, as well as some updates to previously announced LMTs.
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