Bloomberg describes the latest example of a priming transaction that left minority lenders "fuming." Recently, Incora, an aerospace supplier, announced a transaction with Silver Point Capital and Pacific Investment Management Co. in which it received new financing and will potentially save up to $90 million in interest expense. The transaction includes what Bloomberg characterized as "unusually aggressive moves" by its private-equity sponsor in which the sponsor's existing unsecured debt was rolled up into secured debt. [Bloomberg; April 5, 2022]

Russia missed bond payments due to foreign bondholders earlier this week. If the amount remains unpaid, Russia will default on its bonds in early May. According to the Wall Street Journal, new sanctions against Russia were largely to blame for the missed payment, as the U.S. government blocked Russia from using U.S. banks to channel payments on its foreign-currency bonds. Russia's sovereign bonds are currently trading between 5 and 25 cents on the dollar. [WSJ; April 7, 2022]

The senior living industry (and healthcare more generally) continues to be under the watch for potential distress, as reported by McKnight Senior Living. The industry, which was operating at the margin prior to the pandemic, benefited from PPP and other stimulus funds, which are now rolling off. A BDO survey of 100 healthcare CFOs revealed that 50% of long-term / post-acute care and home health organizations defaulted on bond or loan covenants in the past 12 months (42% of healthcare organizations more generally defaulted on their covenants). [McKnights; April 7, 2022]

The U.S. Senate has passed legislation that will raise the debt eligibility limit on small business filings back to $7.5 million, as reported by the American Bankruptcy Institute. The Small Business Reorganization Act (SBRA), which became effective in February 2020, provides small businesses with debts that fall within the eligibility cap a more streamlined path to restructure debts than typical Chapter 11 proceedings. The cap was increased in March 2020 to $7.5 million in response to the COVID pandemic, but that cap recently expired. The new legislation, if approved by the U.S. House of Representatives, will extend the $7.5 million limit for two years. [ABI; April 8, 2022]

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