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Secured Lenders

A secured lender to a company in distress typically holds a favored position among creditors to the extent of its collateral. Accordingly, in most circumstances, the secured lender is entitled to payment of its claims ahead of all other creditors to the extent of the value of that collateral. As such, secured lenders can have great influence over the development of restructuring options. Nonetheless, secured creditors must be proactive in chapter 11 cases lest they risk some of their protections. CTSW assists in seeking adequate protection for the use of collateral by a debtor, safeguarding the validity and priority of a secured lender’s liens and defending against challenges to its secured position. In the event a debtor seeks to sell its assets, a secured creditor often has the right to “credit bid” the full amount of its secured claim, thereby ensuring that the assets are sold at an acceptable valuation.  Recent cases, however, have seemingly chipped away at a secured lenders’ rights (including its rights to credit did in all instances). CTSW remains vigilant for its secured lender clients in blocking any impairment of their rights.



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