2009 was a year of potentially tremendous shifts in the legal landscape for secured creditors. Whether these changes have eroded the protections individual secured creditors have relied on in making their loans or simply recognized and reinforced the ever-present risks faced by secured lenders in the syndicated loan market is a matter of perspective. Taken individually, Pacific Lumber, Philadelphia Newspapers, Charter Communications, Chrysler, Crown Stock, TOUSA, and Ion Media represent difficult, and sometimes disastrous, outcomes for secured creditors. Taken together they represent a palpable swing in the legal pendulum away from the expansive rights of individual secured creditors toward the rights and remedies of debtors, unsecured creditors, and in some cases the collective action of a syndicate of lenders. Whether these cases will result in restricting the availability of secured credit and/ or increasing the cost thereof remains to be seen.
Reprinted with permission of the LSTA. The LSTA 2010 Loan Market Chronicle, Copyright 2010 by The Loan Syndications and Trading Association Inc., New York, New York. Reproductions, modification, distribution or public display without express written permission of the LSTA is prohibited.