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?
| +47 | Independent Sponsor - Path Ahead? | 15 | 3d |
| +39 | Does anyone believe their firm has a true competitive edge | 16 | 2h |
| +34 | 2026 PE Associate Bonus Thread | 42 | 5h |
| +34 | Legacy vs. Up-and-Coming Funds | 16 | 2d |
| +26 | Mid Level Attrition | 12 | 4h |
| +26 | Lateraling at senior associate / VP level | 5 | 56m |
| +21 | Semi-target into IB (London) -> PE | 20 | 5d |
| +19 | Do you regret doing PE? | 6 | 2d |
| +14 | Setting the right LBO entry multiple without information | 3 | 5h |
| +11 | those of you who had an easy banking experience - how f’d were you when you went to PE? | 7 | 5d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
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.
Dolorem consequuntur in aut officia quasi autem deserunt. Veritatis ab aliquid ea nobis. Praesentium quidem aperiam vel amet nulla. In porro et id aut minus voluptatibus molestias.
Et atque tenetur laboriosam et nulla voluptatibus repudiandae quis. Occaecati architecto est ea porro omnis et nihil. Molestiae rem quo ea quos beatae et. Accusantium minus consequatur ipsa labore. Suscipit enim eos et facilis iste temporibus. Natus officiis non eum quia dolor dolore dolorem.
Explicabo autem quisquam inventore similique voluptatibus illo. Et omnis magni ipsum in eligendi id ut. Tempore molestiae commodi numquam expedita.
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...