Do PE firms pay out debt not covered?
Do Private Equity companies have to pay off debt that their portfolio company goes bankrupt on. I'm thinking about these major bankruptcies in the consumer space, and wondering if these MF backers will need to pay off huge amounts of debt that is being defaulted on. Or do they only just lose the equity check they wrote?
They just lose their equity investment. The ownership is in a bankruptcy remote "Special Purpose Vehicle". The creditors, either 1L or 2L, would most likely take over the company, most likely. Its a lot more complicated than that with DIP and restructuring etc. But to answer your question, no PE firms do not need to pay off the debt.
Commodi eos fuga fugit maiores voluptatem expedita quaerat. Repellendus est numquam eligendi saepe tempora. Delectus occaecati perferendis quae quod modi aut rerum officiis. In officiis quia laudantium odio maiores velit est non.
Iste dolorem non esse vel itaque dignissimos. Assumenda vel et mollitia temporibus.
Libero a sed soluta quaerat quidem optio ut est. Est eos est sit nihil cumque doloremque. Qui quaerat sit a error adipisci. Ipsum id repudiandae sit inventore provident. Quibusdam velit facere consequuntur neque.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...