Teaching Covenants, Transforming the Market
Key Takeaways from our Distressed Covenant Analysis Event
We designed Fox Legal Training to teach the market how to analyse covenants because we believe that this knowledge stands to transform the market. It’s a bold claim, and we stand by it.
We recently hosted the first of our live events for students, which work alongside our online platform to keep our material up-to-date, incorporate new topics and feature guest speakers.
The topic was timely – Key Covenant Risks in Distress – and Houlihan Lokey joined us to share perspectives from the front lines of financial restructuring.
Combining covenant analysis and financial restructuring expertise – especially during this turbulent and unpredictable time – is critical, and we are committed to keeping our students ahead of the curve on key risks.
Here are some key take-aways from the session:
- Conducting effective distressed covenant analysis requires combining knowledge of the credit, the counterparties, and the covenants
- The initial analysis should consider whether the business needs fresh capital, and potential sources of funding (e.g., asset sales, new debt, liability management)
- Comprehensive analysis will incorporate the Asset Sales covenant, Debt & Liens covenant, Restricted Payments covenant, Designation of Unrestricted Subsidiaries, Amendment provisions, and (in loans)buyback provisions
- The evolution of open market purchase provisions in loans since the GFC and the disappearance of Payment for Consent covenants in bonds has given borrowers more flexibility to conduct liability management to the detriment of lenders
- Lenders should be proactive and act early to protect their interests
We also invited those interested in FLT’s training programme to attend the event, and everyone agreed that a strong understanding of covenants is integral to their role. Only one firm currently has as dedicated covenant training programme, whilst others rely on their covenant analysis provider for educational needs.
Nearly every participant agreed that FLT’s online training course if essential to their understanding of covenants.
Our offering is dedicated to education, designed to equip our students with the skills to conduct covenant analysis alongside credit analysis because this is where potential risks and opportunities unfold.
To find out more about our live events, contact us at info@foxlegaltraining.com