The 2024-2025 LMT Tape: Deals, Cases, and the Cooperation Era

Introduction

The 2024-2025 liability management transaction (LMT) tape captured the busiest two-year window for out-of-court distressed transactions in U.S. history. CreditSights tracked 46 completed LMTs in 2024, a fresh high watermark, and 2025 ran on track to match or exceed that pace through the first three quarters. Two appellate court decisions on the same day, both involving uptier exchanges, reset the legal foundation underneath these structures, and the post-ruling shift in how lenders and borrowers position themselves represents the most significant structural change in distressed credit since the Trust Indenture Act amendments of the 1990s.

This article walks through the 2024-2025 LMT tape:

The data points come from CreditSights quarterly LMT updates, Octus (formerly Reorg) deal coverage, Mayer Brown legal analysis, and contemporaneous case docket coverage from Bondoro and Greenberg Traurig.

The 2024 LMT tape closed with 46 completed transactions, the highest volume on record. The quarterly cadence ran roughly 9 transactions in Q3 2024 and a striking 19 transactions in Q4 2024, the highest single-quarter total CreditSights had ever recorded. The Q4 2024 surge reflected several borrowers and creditor groups racing to close deals before potential adverse rulings in the Serta and Mitel appeals that came down on December 31.

The 2025 tape ran at a different cadence. CreditSights tracked roughly 27 LMTs through the first three quarters of 2025, with restructuring advisors on track to exceed the 2024 total by year-end. The mix shifted, however, in a meaningful way. The narrower category of uptier, drop-down, and pari-plus transactions ran at 28 deals in 2025, down from 34 in 2024 but still well above the 23 completed in 2023. Within that category, non-consensual structures (the "creditor-on-creditor violence" trades that drew the most legal scrutiny) collapsed in share, while consensual structures backed by cooperation agreements rose to dominance.

Several specific transactions defined the 2024-2025 LMT tape. Each illustrates a particular structural innovation or strategic dynamic:

The single most consequential day in distressed credit law in the 2024-2025 window was December 31, 2024. On that day, two appellate courts issued rulings on uptier exchanges that reached opposite conclusions, splitting the doctrinal foundation underneath non-consensual LMT structures.

The Fifth Circuit's Serta ruling: open-market exception narrowed

The Fifth Circuit, hearing the Serta appeal, unanimously held that Serta's 2020 uptier financing transaction violated the "sacred right" guaranteeing lenders pro rata payments under Serta's loan agreement. The court held that the debt exchange undertaken by Serta did not qualify as an "open market purchase" under the terms of Serta's 2016 credit agreement. The ruling meant that the original Serta uptier was invalid, and the Chapter 11 plan that had relied on the uptier had to be partially unwound. The Fifth Circuit also rejected equitable mootness as a bar to review (an important procedural ruling for future cases) and excised the plan's indemnification provision protecting the participating lenders.

The New York Mitel ruling: opposite conclusion on similar facts

The same day, a New York state court ruling on the Mitel uptier reached the opposite conclusion. The New York court upheld the non-pro rata exchange, finding no similar restriction on affiliate buybacks existed in the underlying Mitel credit agreement. The two rulings together produced a doctrinal split: the validity of an uptier turns on the specific contract language, with even seemingly similar provisions producing different outcomes.

Open Market Purchase Exception

A common provision in syndicated loan agreements that permits a borrower to purchase its own loans through "open market purchases" without triggering the pro rata sharing requirement that otherwise applies to debt repayments. The Serta uptier relied on a broad reading of this exception, with the borrower arguing that a privately negotiated transaction with a majority lender group qualified as an "open market purchase." The Fifth Circuit rejected that reading, narrowing the exception to genuine open-market trading rather than negotiated bilateral transactions.

The market response to the December 31, 2024 rulings was immediate. Several borrowers that had been considering aggressive non-pro-rata structures pivoted toward consensual approaches. Lender groups that had been organizing defensively accelerated cooperation agreements. The overall pace of LMT activity slowed in Q1 2025 as both sides absorbed the new legal landscape, then picked back up by Q2 with the new structural template in place.

The defining structural change in the 2025 LMT market was the rise of cooperation agreements among lender groups. A cooperation agreement is a pre-LME contract among holders of a particular tranche of debt that binds the participants to act collectively, share information, and refuse non-pro-rata transactions absent unanimous consent. The agreements emerged in 2023 as defensive responses to the Serta and Boardriders structures and accelerated dramatically in 2024 and 2025.

By Q3 2025, more than 70% of completed LMTs included some form of cooperation framework, according to industry tracking. The agreements take several common forms:

The cooperation era has slowed transaction speed. The 2025 LMTs took an average of four to seven months from initial outreach to close, versus the six to ten weeks typical of the 2021-2022 wave. The longer timelines reflect more complex structuring, more multi-party negotiations, and more careful contract language review. The trade-off is greater post-deal durability: cooperation-era transactions have a much lower rate of subsequent litigation than the pre-Serta wave.

The clearest empirical case for cooperation agreements lies in the actual recovery outcomes when LMTs run through to bankruptcy. Two cases illustrate the dispersion that opens between participating and non-participating lenders.

In the Diebold Nixdorf restructuring, the prepetition uptier exchange split first-lien lenders into participating and non-participating tranches. Participating lenders received superpriority term loan tranche obligations that ultimately rolled up into the DIP and recovered 100% on emergence. Non-participating first-lien lenders, holding the subordinated legacy claims, recovered approximately 38%. The roughly 62 percentage point gap captures the value transfer that the LMT effectuated.

The Cineworld restructuring produced an even sharper outcome. Prepetition priming term loan facilities (held by participating lenders) recovered 100% through the DIP roll-up structure. Non-participating legacy term loan facilities recovered an estimated 3.4%. The roughly 96 percentage point gap represents one of the widest documented value transfers in distressed credit history.

A broader analysis of 38 LMT-touched restructurings tracked since 2017 found that the disfavored lenders' recoveries were depressed by approximately 70% versus what they would have recovered absent the LMT, a hit of roughly 40% of par value across the cohort. Issuers that emerged from bankruptcy after a prior LMT delivered weighted-average aggregate recoveries of approximately 47% on original first-lien claims, versus 57% for issuers that did not execute prior LMTs.

The Serta ruling did not end aggressive LMT structuring. Borrowers and their advisors developed several workarounds in 2025 that operate within the legal limits Serta imposed:

The 2024-2025 LMT tape produced a clear stratification of legal and financial advisors. Understanding which firms work which side of which transaction matters for interview prep because the firm splits often map directly onto recruiting opportunities.

On the legal side, three law firms dominated borrower-side LMT mandates. Paul, Weiss, Rifkind, Wharton & Garrison built the original Serta playbook and advised on a substantial share of subsequent uptier and drop-down structures. Kirkland & Ellis ran the heaviest volume of large-cap LMT mandates, often paired with parallel Chapter 11 preparation work in the same matter. Davis Polk & Wardwell took an increasing share of transactions where the borrower preferred a more measured legal approach with less aggressive structural innovation.

On the creditor side, the dominant firms split by practice area. Akin Gump Strauss Hauer & Feld led many ad hoc creditor group representations, particularly on the cooperation agreement organizing side. Gibson Dunn & Crutcher took the lead on several high-profile excluded-lender lawsuits including the Serta appellate work. Wachtell, Lipton, Rosen & Katz took selective high-end creditor mandates, generally for specific institutional holders rather than ad hoc groups.

On the financial advisory side, the LMT tape rewarded firms with deep credit-side capabilities. Houlihan Lokey ran the highest mandate count for both borrower and creditor-side LMT work, leveraging its bond and loan trading desk infrastructure to identify holders and organize groups. PJT Partners took several high-profile borrower-side LMT mandates, often paired with parallel Chapter 11 contingency planning. Lazard, Evercore, and Moelis split the remaining large-cap mandate flow, with selective participation from Centerview and Guggenheim Securities on specific situations.

Not every 2024-2025 LMT achieved its intended outcome. Three categories of failure are worth knowing for interview prep:

The 2024-2025 LMTs concentrated in specific sub-sectors that reflect the underlying credit cycle. Understanding which sub-sectors saw heavy LMT activity helps frame which businesses faced the deepest distress.

Software and technology saw a surge of LMTs through 2024 and 2025, particularly among private-equity-owned companies that had used aggressive leverage assumptions during the 2020-2021 funding window. Cvent, ConvergeOne, and several smaller software platforms ran LMTs to extend maturities and reduce coupons. The ConvergeOne case in late 2025 produced an important Delaware ruling on equal treatment in LMT structures, providing additional guidance to the post-Serta market.

Healthcare was the second-most-active sub-sector. Hospital systems, physician practice management groups, and skilled nursing operators ran multiple LMTs in 2024 and 2025, typically structured as exchange offers or amend-and-extend transactions. The healthcare distress profile combined operating margin compression with PE-driven leverage, producing a recurring pattern across the sub-sector.

Consumer and retail saw heavy LMT activity, often as a precursor to Chapter 11. The pattern was that companies attempted out-of-court restructurings first, found that the operating model could not support even a restructured capital structure, and then filed Chapter 11 within twelve to eighteen months. The PE-owned consumer brands particularly followed this trajectory.

The 2026 LMT pipeline is shaped by three forces. First, the maturity wall continues to push companies toward refinancing or restructuring. The $1.2 trillion combined leveraged loan and high-yield bond maturity wall through 2027-2029 guarantees a steady flow of LMT mandates regardless of macroeconomic conditions.

Second, the cooperation-era structures will likely become standard. The 2025 share of LMTs incorporating cooperation agreements rose from low single digits at the start of 2024 to over 70% by Q3 2025, and that share is likely to continue rising. Lender-side organizing has reached a level of sophistication where cooperation agreements are negotiated proactively before any specific LMT proposal arrives.

Third, the legal landscape continues to evolve. Several appellate cases working through 2026 dockets will further refine the rules around non-pro-rata structures, drop-down restrictions, and credit agreement interpretation. The Serta decision was important but is not the final word; the next round of rulings will determine whether cooperation-era structures hold up or whether new vulnerabilities emerge.

For interview prep, the practical takeaway is that strong candidates can speak fluently about the LMT volume picture (record 2024, sustained 2025), the December 31, 2024 doctrinal split (Serta vs. Mitel), and the cooperation-era response. The next article in this section drills into the Purdue Pharma decision, the other major 2024-2025 court ruling that reshaped the bankruptcy landscape.