U.S. Liability Management Transactions: Quarterly Update Through Q3 2025
Ian Feng, J.D. - Senior Covenant Analyst, Covenant Review
13 October 2025
Insights into the evolving landscape of U.S. liability management transactions through Q3 2025—exploring key trends, structural innovations, legal developments, and market impacts shaping corporate debt restructuring:
- Quarterly Trends in U.S. Liability Management Transactions: Analyze the latest data and insights on transaction activity, structural complexity, and leading sponsors driving LMTs in 2025.
- Structural Innovations and Deal Types: Understand new developments in double-dip, drop-down, and uptier transactions, with clear explanations of how these strategies are reshaping liability management.
- Litigation and Regulatory Landscape: Stay updated on significant court cases, regulatory shifts, and the ongoing impact of the Serta decision on future LMT structuring.
- Post-LMT Recovery Rates and Outcomes: Examine recovery data for creditors post-bankruptcy, highlighting the differences between in-group and out-group lender outcomes after liability management transactions.
- Blocker Provisions and Investor Protections: Learn how evolving blocker provisions are being used to counter aggressive LMT tactics and what investors should monitor in new U.S. liability management transactions.
The Bottom Line ™️
- In this regularly released report, we provide a summary of key Liability Management Transaction (LMT) trends in the third quarter of 2025.
- For this quarter, the report analyzes evolving sponsor tactics and process–control provisions that will dictate future LMT negotiations.
- We also provide brief descriptions of the most common structures of LMTs, along with visual representations of these structures. We also comment on related “blocker” provisions.
- We discuss ongoing litigation and bankruptcy matters relating to LMTs.
- Finally, we provide a list of LMTs that have been tracked by Covenant Review and LFI since 2013 through the third quarter of 2025.
Overview
Whether called “creditor-on-creditor violence,” “distressed exchanges,” or “out-of-court restructurings,” Liability Management Transactions (LMTs) have hosted an ever-escalating arms race of gamesmanship between and among creditors and borrowers. Indeed, over the course of the past several years, distressed companies have demonstrably proved a willingness to pursue alternatives to capital restructuring outside of the traditional bankruptcy mechanisms. The number of LMTs in the United States has increased dramatically, particularly since 2020—with 2024 representing a new high watermark in many respects While the start of 2025 continued this trend, the number of reported LMTs in Q2 and Q3 has ticked down somewhat since Q1’s fast start (though restructuring advisors are still on track to exceed 2024’s numbers).
This report is a compendium of LMTs tracked by Covenant Review and sister company LevFin
Insights since 2013, including both public and known private transactions, through September 2025. This report is updated on a quarterly basis and is primarily focused on transactions with a material US nexus.
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