The resolution of an acrimonious restructuring dispute in September has again raised the issue of the rights of junior lenders in the workout process.
Mezzanine lenders to German specialist alumina producer Almatis eventually succeeded in persuading management against a senior lender-backed restructuring (that would have seen them wiped out) by convincing them that the company was worth more than the senior lenders claimed. The result is in stark contrast to the outcome of the IMO CarWash dispute in Europe last year where senior lenders saw off a challenge from mezzanine funds, which – together with sponsor Carlyle Group – lost their money.
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