Davis Polk partner and co-lead of our London restructuring practice Mark Knight was quoted in PitchBook exploring repeat defaults across Europe and whether the greater use of LMEs (liability management exercises) is playing a role.

Commenting on how several LMEs are now being challenged in UK courts, and how the courts may shape future restructurings, Mark explains that, “In the US, LMEs initially produced binary outcomes that split investors into clear ‘in’ and ‘out’ groups, often prompting litigation from those lenders left on the sidelines…That landscape has since evolved, with a more even distribution of value in LME transactions — still prioritising creditor groups that drive outcomes and/or provide new money — but making it less economically rational for minority lenders to sue.” 

He added, “Given Europe is at an earlier stage in the LME cycle and some of the early cases have been litigated, it feels logical that — depending on the outcome of those cases currently being litigated — we will likely move in the same direction as the US, with LMEs becoming increasingly inclusive and less binary.” 

The article also highlights how repeat restructurings, amid the growing use of LMEs, are creating a demanding environment for investors. Mark notes that he and his team are “now being approached by investors well ahead of maturity to assess whether provisions in the documentation could leave them vulnerable to such transactions.”  He adds that “prospective third-party financing providers are showing growing interest in identifying valuable assets that could support new capital deployment pursuant to these LME strategies.”

“European market contends with repeat defaults as LMEs enter fray,” PitchBook (March 4, 2026) 

Copy link to share post