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Control Through Observer Rights and a CRO - Laurence Smith

March 6, 2015

Member of the Firm Larry Smith authored an article, "Control Through Observer Rights and a CRO" in The Journal of Private Equity's Spring 2015, Volume 18 edition. Two of the weapons in the arsenal of a second lien, mezzanine, or other leveraged lender are observer rights and the ability to mandate that a borrower engage a chief restructuring officer (CRO). This article examines each of those rights and suggests reasonable limitations on them, reflecting a balance between the legitimate interests of borrower and lender. In situations in which a borrower is highly levered and has limited financing options, it may be forced to accept whatever terms a lender demands, but this article assumes the parties have relatively equal bargaining power.

To read the full article, please visit The Journal of Private Equity's website. (Fees may apply.)