NextGen Summary continued from page 60 2026 NextGen Day illustrated the spirit of the NextGen Program: practitioners navigating cross-border restructuring and insolvency in uncertain times, proposing creative solutions, and engaging in the kind of cross-jurisdictional dialogue that makes the III’ s NextGen Program a vital incubator for the profession’ s future leaders.
Best Laid Plans continued from page 42 demonstrate that outcomes often depend on the precise drafting of credit agreements rather than broad equitable principles. The panel noted that courts continue to scrutinize concepts such as“ open market purchases,” sacred rights, and non-pro rata exchanges, while disputes surrounding cooperation agreements, antitrust theories, and lender good-faith duties continue to expand. Canada generally places significant emphasis on the contractual bargain reflected in the loan documents, while the Netherlands imposes additional scrutiny through avoidance principles and potential management liability. Thus, although LMEs are frequently marketed as a cheaper alternative to Chapter 11, subsequent litigation can significantly erode any anticipated cost savings.
Even so, the panel cautioned against concluding that these characteristics necessarily render LMEs ineffective. The absence of operational restructuring and extensive litigation do not necessarily mean that LMEs and prepacks should always be viewed as failures. While the common perception of LMEs is that they serve as a mere precursor to a formal, in-court restructuring process, they can be highly effective in certain circumstances, and many transactions are intentionally designed to position stakeholders for a subsequent Chapter 11 or comparable restructuring.
Indeed, the paradigmatic“ good” LME is a transaction that gives a debtor breathing space to manage short-term financial insolvency in response to macroeconomic or industry events, or even prepare for an orderly restructuring or wind-down. They can also attract investors who are more interested in the debtor’ s performance and willing to provide new money in the future. For participating lenders, LMEs almost invariably have strong upsides by providing short-term economics and longer-term leverage for future distress situations. Nevertheless, the speakers agreed that these tools are most effective when they provide meaningful time to implement operational reforms rather than merely postpone financial distress. Successful restructurings ultimately require addressing both the balance sheet and the underlying business, while carefully managing litigation risk and preserving fairness among competing creditor constituencies.
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