Special situations financing
Positions where the capital structure itself has to change before any new capital can sensibly enter.
Adjacent to, and frequently structured alongside, structured credit.
A special situation is not simply a distressed one. It is a position where the ordinary route has closed — because a lender wants out, because security is contested, because a deadline governs the outcome, or because the value in the asset is real but invisible to the market pricing it.
What these have in common is that the structure is the transaction. The capital is available; what is missing is an arrangement under which providing it is a rational decision rather than a hopeful one.
When this applies
- An existing lender wants to exit a position before the underlying asset is ready to refinance it.
- The asset has value that the market cannot see, or cannot price, in its current form.
- A deadline governs the outcome — a settlement date, an approval window, a standstill expiring.
- The security position is contested, or the lender group cannot agree among itself.
What makes it difficult
Stressed positions sold into a thin market price off the most reluctant buyer, not the most capable one. Wide circulation makes this worse: it signals distress to the borrower's other lenders and shortens the time available to reach a considered outcome.
The universe of counterparties able to hold a given position is usually small and is defined by holding capacity and mandate rather than by reach. Approaching a hundred parties who cannot act is slower and more damaging than approaching six who can.
Meanwhile the analysis a buyer needs is not a marketing document. It is a direct answer to the recovery question: what is realistically recoverable, over what timeline, and what does walking that path cost.
How it is structured
Establish the real position
Read the security, the encumbrances, the pending proceedings and the intercreditor arrangements as they are, not as the information memorandum describes them.
Define the outcome that is achievable
Separate what would be ideal from what can actually be delivered inside the time and the consents available, and structure to the second.
Select the approach set narrowly
Identify counterparties by holding capacity and mandate rather than by reach, so the position is not priced down by circulation before it is priced at all.
Prepare for the recovery question
Build the diligence material to answer what happens if the plan does not hold, because that is the question the decision turns on.
Settle enforcement before commercials
Agree standstill, enforcement and intercreditor terms first. Facilities of this shape fail at documentation far more often than at pricing.
What a capital provider tests
- What secures the position, and what it is genuinely worth on a bad day
- How quickly security can be realised, and what that realisation costs
- Whether enforcement is practically available, or only theoretically
- What the promoter or sponsor stands to lose if the plan fails
- The recovery path, its timeline, and who else has to agree to it
Where we have done this
Discuss a situation
Bring the position, the existing debt schedule and the timeline. We come back with a view on whether it is structurable and what it would take.
Discuss a mandate