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.