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Legal Ease with Lexis+® UK – January 2026
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The interaction between Liability Management Exercises and formal insolvency procedures
In Europe the number of liability management exercise is increasing but on less aggressive terms than in the US. The increased litigation risk and costs of schemes and restructuring plans may well trigger more LMEs in the UK.
The term liability management exercise (LME) or transaction (LMT) can have various meanings. In this Legal Ease article it refers to a borrower using flexibility in the finance documents (sometimes unintentionally granted by the lenders) to adjust its capital structure thereby accessing additional and/or cheaper debt or reducing leverage. Common types of LME are up-tiering drop-down transactions and double-dip transactions.
LMEs do not involve any formal or court driven restructuring techniques eg Pt 26A restructuring plans (RPs) or Pt 26 Schemes of Arrangement and so are a form of “out of court” process.
Typically the...
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