Distressed disposals and non-pro rata LMEs

The paper examines how distressed disposal provisions under English law-governed intercreditor agreements are increasingly being used to facilitate liability management exercises (LMEs) and non-pro rata outcomes for creditors whose claims rank equally under an intercreditor agreement. In particular, the paper covers: 

• How distressed disposal provisions operate under English law-governed intercreditor agreements. 
• The use of distressed disposals in LMEs to deliver non-pro rata outcomes, as demonstrated by the 2025 Selecta uptiering LME. 
• Recent litigation in Selecta, Hunkemöller and Hurtigruten, and the growing focus on the abuse of power principle. 
• What could be next. 

Read the LMA Insights paper.