💥RX Pros Weigh In. Part I.💥
A panel of bankruptcy/restructuring pros looks back at '25.
As has been customary at year end for PETITION,1 we’re ending ‘25 by stifling Johnny’s dumba$$ery and, instead, collecting views from a select number of professionals who, as we previously stated, “…actually work deals rather than just talk sh*t about them.” As you all well know, we tend to ask a lot of questions and RX pros love to be long-winded and so we’ve broken this “survey” up into two parts, the latter of which will drop on December 30, 2025. Let’s dig in 👇.2
1. PETITION: We, and others, have beaten the LME theme to death (see, e.g., our recent “Notice of Appearance” segments with Goldstein, Schaible and Greenberg). Putting LME aside, what is the biggest restructuring theme to emerge out of ‘25 and why?
Colin Adams (Partner, COO, and GC of Uzzi & Lall): The resilience of the US economy, and the creativity of companies, creditors and advisors to navigate the many challenges that 2025 put in our way. If you step into the “Wayback Machine” and set the dial to December 2024, you probably would have guessed that high interest rates and the imposition of tariffs would ruin the economy. It hasn’t happened (yet), and the dramatic rise in equity markets driven by excitement over AI is making investors feel richer, powering unexpectedly robust consumer behavior (for now). On the restructuring side we have been involved in a variety of situations, including an old-school plan of reorganization that preserved hundreds of millions of dollars’ worth of tax net operating losses and several out of court deals where novel solutions and strategies resulted in more value for stakeholders than had been predicted ex ante. Like those scary raptors in the Jurassic Park movies, restructuring professionals cannot be contained; we find a way…
Shai Schmidt (Partner, Glenn Agre Bergman & Fuentes): The dominant theme is the barrage of reversals of SDTX bankruptcy court rulings by the district court and Fifth Circuit, starting with Serta a year ago and continuing with ConvergeOne, Sanchez, Wesco and others. While the complex case panel in Houston is still a relatively popular choice for debtors, it is not nearly as attractive as it used to be for companies seeking certainty and finality, particularly given the erosion of equitable mootness in that jurisdiction.
Angela Libby (Partner, Davis Polk & Wardwell LLP): The impact of appeals and decisions by higher courts on our practice. Just to name a few, you’ve got Purdue (third party releases — to be fair, this was a ’24 decision but for those of us living it, it really does feel like it’s just been a very long, never-ending year), ConvergeOne (backstops), Incora (multi step transactions). When I was very junior, someone once told me that the further up the chain from the bankruptcy court you go, the less likely the judicial decision is to be the right answer. That’s not a view I subscribe to, but the reality is that restructuring pros all tend to take a certain level of comfort in the predictability and commercial focus of the bankruptcy court judges we practice before. And the more that we see a willingness of parties to appeal decisions, and as the doctrine of equitable mootness loses strength, the more likely it is that we will all be living with decisions that affect our practice far beyond the particular case in hand. As corporate practitioners it’s always a bit jarring to wake up and read that certain tools that you’ve had in your toolbox for years are no longer available, but thankfully we’re all a nimble set of folks who will keep making up new transaction structures!
Jeffrey Finger (US Co-Head of the Debt Advisory & Restructuring Group and Managing Director at Jefferies Financial Group Inc.): 2025 saw the beginning of a distressed cycle in Private Credit. This market has seen a rise in PIK interest (over 13% of the private credit market) as well as lowered marks and non-accruals, which rose to over $5b in the LTM period. Lenders are now having to decide if they want to kick the can, look to sell the business, or take the keys. Sponsor relationships and the creditors desire/ability to operate the business will determine how these restructurings play out.
Dave Orlofsky (Americas Co-Leader of Turnaround & Restructuring and Partner & Managing Director at AlixPartners LLP): If we exclude LMEs, then the second biggest restructuring theme is private credit. Many people in the market are talking about the pros and cons of private credit. Regardless of whatever your view might be, private credit is not going away any time soon. I think one interesting issue will be how lenders deal with defaults which will inevitably increase as this asset class continues to grow. Will private credit lenders be more amenable to work with the borrower to be in contention for future deals or will they be more aggressive on troubled credits and less concerned about the next deal?
Benjamin Beller (Partner, Sullivan & Cromwell LLP): In light of First Brands, Tricolor and others, one main lesson that should be learned from ’25 is the importance of old-fashioned lender due diligence. Private credit lenders in particular need reliable systems to verify collateral backing their secured facilities, and I suspect there is going to be more attention and investment in this type of expertise in ‘26.
Michael Handler (Partner, King & Spalding LLP): The biggest theme from ’25 which will carry over into ’26 is simplicity and transparency. Putting aside accusations of fraud, First Brands underscores the downside risks attendant with companies with extremely complicated corporate and capital structures. Credit investors may start to penalize companies with complicated corporate and capital structures.
Nick Campbell (Managing Partner of MERU LLC): Yes, you have beaten LME to death 😊, but it’s all good. I’ve got a few: the flight away from bankruptcy due to the fee load, the continued ascendance of private credit leading to fewer bankruptcies, and more motivated professionals thinking strategically on getting things done out of court.
Jude Gorman (Founding Partner, Collected Strategies): This is LME-related, I suppose, but companies choosing alternate routes to avoid filing for bankruptcy has been big. Those alternate routes aren’t always a great idea, even from a cost-benefit perspective, but the nominal cost of a bankruptcy is such these days that companies have been forced to dust off ABCs and other tactics that we haven’t seen in a while.
Matt Barr (Co-Chair of Weil’s Restructuring Department): The return of the bankruptcy filing (irrespective of certain articles calling for the “demise” of the bankruptcy lawyer). 2025 had the most filings since 2010 for those keeping track. Macro pressures such as higher interest rates and challenging operating conditions are driving financial stress beyond just liability management transactions. Additionally, the expiration of time periods LMEs provided companies.
Dan Fisher (Co-Leader of Akin’s Capital Solutions Team): The biggest theme was not the LMEs but what came next. 2025 marked the year when the LME era encountered a real default cycle, and the capital stack changed. When companies stopped favoring runway over performance, it became clear that managing complex liabilities couldn’t replace solid fundamentals. Several credits that “won” during the LME period in 2023 and 2024 still went through restructuring, often facing more complexity and less operational strength than before. This led to a true post-LME restructuring cycle, both in and out of court. Investors had to confront the real condition of the business, not a made-up version. Here’s what that meant in practice: first, recovery math became realistic. Distressed M&A and hard-reset bankruptcies surpassed the amend-extend treadmill; second, governance regained importance. Lenders asserted their rights and opposed actions that shifted value; and, third, capital structures were fixed, not just dressed up. Real liquidity and genuine equity replaced toggles, deferrals, and financial tricks. In 2024, creativity was rewarded. By 2025, clarity became essential; price discovery, governance discipline, and the willingness to recognize that some LMEs were merely signs of impending bankruptcy.
Ryan Bennett (Chair of Willkie’s Restructuring Group): If you put LME aside, the biggest restructuring theme to emerge in 2025 is that paper management hasn’t gone away, but it’s no longer sufficient on its own. LMEs are still very much part of the toolkit, but what we’re increasingly seeing is that the paper itself now needs to be restructured. Over the last few years, companies bought time through amend-and-extends, drop-downs, PIK toggles and other balance-sheet maneuvers, and that worked when liquidity was plentiful and interest costs were manageable. In 2025, the stress has shifted from the maturity schedule to the capital structure: many companies bought runway, but now they can’t comfortably service cash interest and invest in the business at the same time. As a result, situations that once could be solved with incremental tweaks now require real value allocation, real impairment, and often a court to impose it. Sponsors aren’t abandoning LMEs, but they’re being more selective, reserving capital for credits with a credible path forward and losing patience with repeated financial engineering in marginal cases. Layer in structural business pressures, such as higher costs, weaker or permanently changed demand, reimbursement and regulatory headwinds, and it becomes clear why paper alone can’t do all the work anymore. The theme of 2025 isn’t the end of LMEs; it’s that paper management has a half-life, and as that half-life shortens, many restructurings needed to turn to the bankruptcy court to get implemented.
Ron Meisler (Partner, Skadden, Arps, Slate, Meagher & Flom LLP): The two biggest restructuring themes to emerge out of 2025, include, first, a greater willingness to implement a restructuring outside of the U.S. to take advantage of insolvency regimes perceived to be more efficient, flexible, and/or less expensive, e.g., the UK, coupled with chapter 15 recognition. We saw this most recently with Fossil’s UK Restructuring Plan, which was then recognized through a chapter 15. The UK Restructuring Plan has some novel features that allow for greater flexibility in structuring and is less costly because of a more expedited court process and the lack of statutory committees. And, second, the tension that is developing between creditors seeking to facilitate an LME-like transaction (with favored and disfavored creditors) through lucrative roll ups and backstops juxtaposed to the nascent judicial resistance to that approach, e.g., American Tire and ConvergeOne.
2. PETITION: What would be your selection for the most impactful restructuring matter of the year and why? Feel free to acknowledge a matter that filed for chapter 11 and/or one that restructured out-of-court but do NOT shamefully note your own work.
Dan Fisher: First Brands was the most significant restructuring of the year because it revealed a blind spot that every credit investor is aware of but hopes to avoid: real fraud hidden within a company that seems completely legitimate. Lenders approved what looked like a large, stable credit backed by banks, complete with years of documentation and all the usual signs of trustworthiness. Then everything collapsed. You can investigate a challenging business, but you can’t dig through numbers that were never true in the first place. By the time anyone recognized the truth, the value was already gone. What made First Brands so impactful wasn’t just the losses; it was the uncomfortable truth that even experienced investors can fall victim when a company presents a strong façade of credibility while operating in a very different reality beneath the surface. It served as a wake-up call: the risk of fraud has clearly moved up-market, and some of the companies that appear the safest on paper may actually be the hardest to understand.
Colin Adams: First Brands. First Brands has it all. We have not even seen the hand-to-hand combat likely to ensue among lenders who were sharing collateral without realizing it. First Brands is already changing the way that financial institutions think about diligence and risk: expect more scrutiny, higher costs and delayed credit committee approval processes from your lender clients.
Angela Libby: It may be too early to cite this one but it’s hard to see how First Brands does not ending up having a major impact on a number of fronts — on how people think about front end diligence and ongoing reporting requirements, how best to structure bankruptcy remote entities, and of course how to think about risks associated with DIP financing. More generally, between First Brands, Pine Gate, Tricolor, Sun Power, Sunnova, etc., we are seeing a wave of filings where the filing entities are not the entities that hold the real value and it’s not practical or feasible to restructure the debt at the project/securitization level. These structures inherently leave fewer options available to try to restructure the topco companies and preserve value for the corporate level debt. My view is that this trend isn’t going anywhere and a lot more folks in restructuring are going to become project financing / securitization experts over the next few year.
Benjamin Beller: First Brands — a situation in which two types of financing that have been counted on as accessible and reliable (working capital/receivables and DIP financing) both face significant losses. A loss of confidence in either could have a big impact on liquidity for future restructurings.
Michael Handler: First Brands, and it won’t even be close. It is a perfect mix of intercreditor and intercompany litigation, the benefits of the bankruptcy process (e.g., transparency, channeling disputes into single forum, speed) and its limitations and downsides (tremendous professional fee burn, formalities, procedure) against a backdrop of unknown asset value, liabilities, and bottomless pit of liquidity need.
Ryan Bennett: First Brands. While the fall of First Brands appears to be due to a massive fraud, it also showed the first potential cracks in private credit. It could be signs of things to come.
Shai Schmidt: The ConvergeOne ruling with respect to equal treatment under a plan. While it remains to be seen whether courts in other jurisdictions will follow that decision, it has already given minority lenders negotiating leverage in other contexts. A big question for 2026 is how courts will apply the ConvergeOne reasoning to other issues, including whether and to what extent non-pro rata DIPs are permissible.
Nick Campbell: Due to the potential ramifications down the line, it could be Fossil’s “Stapled Exchange,” which utilized Part 26A of the UK insolvency law to extend maturity on unsecured notes. It will be interesting to see if that ends up being a solution that could have big implications for other restructurings to come.
Dave Orlofsky: Fossil was a really interesting cross-border restructuring — a US public company that filed in the UK, had the plan approved by the High Court and then was able to have the Southern District of Texas recognize and give effect to the plan under Chapter 15. This enabled enforcement of the plan in the US, and in a post-Purdue environment, allowed for non-consensual third-party releases.
Ron Meisler: Purdue Pharma’s restructuring and ultimate emergence from chapter 11. Despite the invalidation of Purdue’s third-party release, the Plan was finally confirmed and the conditions satisfied. The Purdue chapter 11 plan has established a blueprint for how to work with State AGs and other governmental institutions to allocate settlement proceeds for mass tort victims (here, opioid victims) and has helped pave the way to facilitate a mass tort case without using global third-party non-consensual releases.
Jeffrey Finger: Sunnova’s June 2025 bankruptcy filing was very impactful as it was one of the first major restructurings due to policy changes by the current administration. It was also the largest company in a recent wave of alternative energy / energy transitions restructurings.
3. PETITION: Macro or otherwise, who are your biggest winners and losers of the year?
Michael Handler: Biggest winners: advisors involved in expensive restructurings. Biggest losers: investors involved in expensive restructurings.
Angela Libby: Big AI feels like the winner this year. The sheer amount of capital investment over the past year is just mind blowing. And AI has managed to land on top of the political climate and attract really top talent across the board. There’s the open question of whether AI is the long-term winner but it’s hard to argue that these companies aren’t dominating 2025.
On the flip side, I think that I’d put recent grads as the losers. As someone whose first year of law school was the same year that Lehman collapsed, I’m very sympathetic to the generation entering a job market that is just fundamentally different than what they reasonably could have foreseen even a few years ago. Maybe spoken like a true millennial, but I’m just grateful to be gainfully employed and not to be having to figure it all out right now!
Colin Adams: Winners: Retail Equity Investors. Losers: Private Equity. It’s a very crowded strategy and, for a whole host of reasons, exits are taking longer and are coming at lower valuations for the most part. Capital seeks the most efficient returns available: a 15%+ return on listed equities puts pressure on all other asset classes and strategies. But, “Ain’t that America”: winners, losers and little pink houses.
Ron Meisler: Biggest losers – EV/solar power, both of which have been influenced by an adverse change in government policies. In addition, consumer preference has turned away from EV, compounding the industry’s troubles. Biggest winner: The Geo Group, who was proactive to implement a liability management transaction several years ago when it was suffering from headwinds, and is now the beneficiary of tailwinds and has soared. Since the closing of its liability management transaction in Q3 2022 to the present, the stock price has doubled. Goes to show that “buying time” if done right can in fact buy time for a real turnaround.
Jeffrey Finger: The biggest winner from the year, I think, is Michaels stores — a once distressed credit, at major risk of rising tariffs, in a sector that is full of bankruptcies and restructurings, Michaels has seen continued sales growth and margin expansion in 2025 and its capital structure has gone from trading in the 50s-60s to now trading in the 90s. For biggest losers this year, the cable & satellite sector is seeing the largest dollar volume of debt trading at distressed levels and will be a focal point of restructuring activity in 2026.
Matt Barr: Solar and solar. It was a challenging year for renewables, particularly solar companies. Yet Texas generated more power from solar farms last year than coal plants for the first time.
Nick Campbell: Easy, my former brethren at Alvarez & Marsal. They did 4x the fees* as the next closest firm. Biggest loser — AlixPartners.
Shai Schmidt: Winner: The hybrid restructuring advisor who can thrive both in and out of court. Loser: The “un-magnificent” S&P 493.
Dave Orlofsky: Biggest winners: The Southern District of Texas, Bad Bunny (he’s punched his ticket to the Super Bowl) and Indiana University football (regardless of how they perform in the playoffs). Biggest losers: Patrick James, and the New York Jets and Giants (it has been a rough year for NY football fans).
Benjamin Beller: Winner: Private credit. Loser: Private credit.
*Per Octus, 9M’25 Highest Earning Financial Advisors by Final Fee Orders.
4. PETITION: Given the uptick in bankruptcy alternatives and out-of-court solutions, what is something interesting you’ve seen or heard of that’s occurred “off docket”?
Dan Fisher: The most interesting off-docket development in 2025 was the rise of the ‘premium-for-peace’ trade. Lenders quietly paid sponsors a bit extra to hand over the keys early and avoid another value-destructive LME. After a year of complex capital structures facing real operating stress, the math became clear. It’s cheaper, faster, and better for the business to secure agreement upfront than to endure another forced process that drains liquidity and goodwill, ultimately leading to a restructuring. This shift was evident in the market. There was more distressed M&A, more lender-driven takeovers, and more Article 9 and credit-bid outcomes. Capital stacks could not manage another round of financial maneuvering. In this environment, giving a sponsor a modest premium to exit early is not generosity; it’s efficiency. The dynamic is clear and common in both private credit and BSL, but more so in BSL: (a) lenders are gaining control and a clear path instead of watching value decrease through another lengthy workaround; (b) sponsors are making sensible exits rather than forcing a structure that no longer suits the business; and (c) value preservation has finally taken precedence over value manipulation. For the first time in a while, off-docket solutions resembled negotiated M&A more than restructuring. This shows that credit investors are anticipating problems instead of waiting for a docket number to indicate the direction of the story.
Shai Schmidt: The pace of LMEs in the last few years has caused a dramatic shift in the broadly syndicated loan market, prompting CLOs to seek advice and recognize potential risks in their credits earlier than before. Those lenders’ level of sophistication has grown immensely as a result, which I believe is a very positive development for the credit markets overall.
Colin Adams: It’s not exactly “off docket,” but I think the Fossil transaction could be a template for substantial activity in 2026 and beyond. Fossil used UK legal flexibility to implement a US debt restructuring, leaving the business to operate freely outside of the limitations of a chapter 11 filing while also keeping the company’s equity listed and unimpaired. The FOSL transaction pulled together several themes — LME, efficiency in implementation and choice of favorable laws — that have been floating around the marketplace for some time now. It bears emphasizing that the transaction used a “surgical” approach to solve for one troublesome part of the company’s capital structure with a 75% acceptance threshold dragging the entire class through amendments to sacred rights thereby eliminating holdouts without the need to commence full-blown chapter 11 cases. Looking ahead, while Fossil was executed as a par exchange, it could just as easily have been done to force a discounted exchange on the class. Fossil is a credit to the advisors and investors involved and stands as a terrific example of deal-making creativity that should be a part of the toolbox for any troubled company with assets and operations in the US and the UK.
Angela Libby: The increase in public companies going out for a shareholder vote on transactions that are effectively highly dilutive debt to equity transactions (as a straight vote on the transaction and without all of the “stapled pre-pack” paperwork along with it). These are cost effective transactions that get the public company to a restructured balance sheet, but of course the company bears the shareholder vote risk.
Matt Barr: The DGCL 144 amendments that went into effect this year represent an (underreported) sea change in how boards navigate controlling stockholder transactions. (PETITION NOTE: If you need it, here’s Weil’s primer on the amendments).
Benjamin Beller: We have seen and advised in a number of situations of lenders taking the keys through creative merger structures to navigate consents and approvals and to minimize value leakage. We have also been seeing (and advising) on mass-tort situations that avoid a chapter 11 filing but properly leverage the threat of a chapter 11 to force a commercial litigation settlement. And a plug for our City Brewing out of court restructuring transaction where we obtained approval from a large group of lenders (over 70 individual holders) to avoid what would have otherwise been a business-disruptive prepack.
Michael Handler: Distressed asset sales with lenders getting seller notes. Not super complicated but can serve as an efficient alternative to “taking the keys.”
Ryan Bennett: The most interesting thing is that all of the top law firms are focused on expanding and enhancing their restructuring groups.
Ron Meisler: The Singapore Arbitration Centre (one of the two most active arbitration centers in the world) has created an insolvency arbitration panel with special rules to streamline insolvency-related arbitration and knowledgeable arbitrators on insolvency. Under the NY Convention, almost every country in the world recognizes the outcome of binding arbitration. Arbitrators can rule on a whole host of disputed issues. The concept would be to have an alternative to a court system for cross-border disputes so as to make the resolution of these disputes more efficient and economical.
5. Given some recent court decisions, it looks like the DIP financing stage might be a resurgent battle point. What’s your take on recent developments around DIP financing?
Matt Barr: Opportunistic creditors seeking advantages over other creditors continues to creep into the bankruptcy court. For example, in cases like American Tire, we saw lender groups try to roll up larger prepetition debt amounts while pushing out others with non-pro-rata arrangements. Call them “in-court LMEs” or something else, but I have a feeling they will continue, especially while we watch cooperation agreement fights play out.
Michael Handler: I wrote an entire article on this topic — You’ve Got to Fight! For a Contractual DIP Financing Participation Right. Even though I recall my friends at PETITION sh*tting on my valiant and successful representation of the minority term lenders in American Tire, it and other recent cases underscore the trend of DIP financing becoming a new battle ground for majority creditor opportunism and bankruptcy litigation. My view is that Section 364 of the Bankruptcy Code was not designed to distribute significant (if not a majority) of enterprise value via DIP financing, and opportunistic majority creditors groups are taking advantage of the attendant lack of statutory protections for minority creditors and pari passu secured creditors.
Ron Meisler: There is tension developing between creditors seeking to facilitate an LME-like transaction (with favored and disfavored creditors) through lucrative, non-pro-rata roll ups and backstops and the nascent judicial resistance to the approach, e.g., American Tire and ConvergeOne. I think Judge Goldblatt in American Tire probably has the better argument on the interpretation of the intercreditor dispute, which is why this issue is repeatedly settled. I expect this issue to arise throughout 2026. As this issue is brewing, Company counsel often feels the urgency to placate a domineering first lien secured lender, in part because all too often we think there is no alternative. But, a highly contentious DIP Loan that attracts costly and disruptive litigation, with hyper-expensive terms and inadequate liquidity doesn’t set up a case for success. In these circumstances, courageous company counsel does have options because sophisticated judges will be willing to rule on adequate protection with respect to a third-party DIP and/or non-consensual use of cash collateral. These issues are hotly contested, but most often — almost always — settled consensually on far better terms for the company, which can make all the difference down the line. And when jobs and families are on the line, these decisions can be very rewarding for the practitioner (and the introspective and remorseful lender) when considering what took place with the benefit hindsight.
Shai Schmidt: We have seen debtors and lender groups seek approval of increasingly aggressive DIP terms, including very large roll-ups. The pushback from Judge Lopez on a 5.6-to-1 roll-up at the first day hearing in the Pine Gate case may indicate that the need for emergency financing does not equate to a carte blanche on terms.
Nick Campbell: Let’s be honest, this is driven by lenders continuing to add economics to the financing which has been increasing for the past several years. In a capitalistic state, this will happen until there is pushback which we are seeing right now. The pendulum will swing back at some point (just as it has in the past).
Angela Libby: “All that’s new is old.” Almost every deal we did between ’16 – ’20 involved a DIP with a backstop commitment that just took out the DIP through equity financing on the back end of the case. And we’ve all seen a number of straight up “equitizing DIPs.” The current developments are less of a major shift and more of a combination of the LME technology we all know and love (?) and a shift in emphasis in where and how to implement the commercial deal, which will still often be decided prepetition.
Jeffrey Finger: DIP financings will continue to be a point of contention going forward, as creditors look to gain control in the bankruptcy process and prevent additional priming. This kind of litigation is another way for minority lenders in a post-LME bankruptcy filing to try and regain some of the influence lost when the LME took away their priority.
Ryan Bennett: I think the pendulum is starting to swing back to old school chapter 11 cases. If this happens, most cases will have consensual DIPs. And in a minority of cases, we will have fights.
Jude Gorman: DIP fights are interesting and fun and probably do deserve to be a big, if not the biggest, battle point in a case. In a sale case, who cares, but in a non-sale case, or even one where a sale is an option but not locked in, resolution of the DIP is often outcome determinative. More financing players offering more flexible terms gives the company more options to figure out its future, which is a good thing and should be encouraged by the restructuring process. That said, if we do get a recession or an ebbing of the private credit wave, I suspect we’ll revert to the old ways pretty quickly.
Benjamin Beller: First Brands seems to further reduce the path for priming existing lenders. We are also keeping on eye on how courts evaluate the debtors’ DIP financing market check and the requirements of section 364 when there are multiple DIP financing proposals put to the Company.
Colin Adams: Money talks, everyone else walks — with the possible, limited exception of ‘insider’ deals that exclude similarly situated capital providers that actually want to join in funding a DIP. As you noted on December 14, the bigger news here may be First Brands where the “DIP A” is trading 35 – 39.
Where absolutely necessary, some answers have been edited for (i) more clarity and correct grammar and (ii) the elimination of douchey chest-pounding self-promotional bullsh*t.