A consortium in which holding out paid better than agreeing.

The situation

An infrastructure services company entered restructuring with a lender consortium holding materially different security positions. Some lenders were secured on receivables, others on fixed assets, and several held no specific charge at all.

The complexity

A restructuring requires the consortium to agree, and this one had no natural majority. Lenders with weaker security had the least to lose from enforcement and the most to gain from holding out, which is the position that stalls most Indian restructurings.

The structure

The proposal was built around a waterfall that paid differentiated recoveries by security position rather than pro rata, so holding out no longer improved any single lender's outcome. Enforcement rights and standstill terms were settled in the intercreditor agreement before commercial terms were circulated.

The outcome

The consortium reached agreement and the restructuring was implemented across the full lender group.

Described generically. Client identity, counterparty and transaction terms are confidential.